Slide 1: Q1 2013 Earnings Call
Q1 2013 Earnings Call January 23, 2013
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 subj
Slide 3: Q1 Summary
Q1 Summary First Quarter • Sales of $3.13 billion – down 1% versus prior year • Adjusted EPS of $0.65 – up 3% versus prior year • Free Cash Flow of $304 million; returned $267 million to shareholders • Book to bill of 1.02 excluding Subsea Communications Solid execution with strong margins and cash
Slide 4: Q1 Revenue Summary
Q1 Revenue Summary ($ in Millions) Actual Organic Segment Q1 FY13 Q1 FY12 Growth Growth Transportation Solutions $ 1,264 $ 1,231 3% (1)% Network Solutions 734 802 (8)% (8)% Industrial Solutions 700 685 2% (8)% Consumer Solutions 436 452 (4)% (2)% Total $ 3,134 $ 3,170 (1)% (4)% Actual Organic Region
Slide 5: Transportation Solutions Q1 Summary
Transportation Solutions Q1 Summary ($ in Millions) Growth Rates Sales by Business Growth Rates Actual Organic Actual Organic Sales $1,264 3% (1)% Automotive $1,264 3% (1)% Adj. Operating Income $205 10% Transportation Solutions $1,264 3% (1)% Adj. Operating Margin 16% Deutsch sales of $70 million •
Slide 6: Network Solutions Q1 Summary
Network Solutions Q1 Summary ($ in Millions) Growth Rates Sales By Business Growth Rates Actual Organic Actual Organic Sales $734 (8)% (8)% Telecom Networks $281 (7)% (6)% Data Communications 199 (5)% (5)% Adj. Operating Income $60 (8)% Enterprise Networks 146 (9)% (8)% Adj. Operating Margin 8% Subs
Slide 7: Industrial Solutions Q1 Summary
Industrial Solutions Q1 Summary ($ in Millions) Sales by Business Growth Rates Growth Rates Actual Organic Actual Organic Industrial $270 (15)% (13)% Sales $700 2% (8)% Aerospace, Defense, & Marine 243 42% (3)% Adj. Operating Income $84 (16)% Energy 187 (5)% (3)% Adj. Operating Margin 12% Industrial
Slide 8: Consumer Solutions Q1 Summary
Consumer Solutions Q1 Summary ($ in Millions) Growth Rates Sales by Business Growth Rates Actual Organic Actual Organic Sales $436 (4)% (2)% Consumer Devices $274 (2)% (1)% Adj. Operating Income $41 32% Appliance 162 (5)% (4)% Adj. Operating Margin 9% Consumer Solutions $436 (4)% (2)% • New product
Slide 9: Q1 Financial Summary
Q1 Financial Summary ($ in Millions, except per share amounts) Q1 FY13 Q1 FY12 Net Sales $ 3,134 $ 3,170 Operating Income $ 293 $ 361 Restructuring & Other Charges 92 18 Acquisition Related Charges 5 4 Adjusted Operating Income $ 390 $ 383 Operating Margin 9.3% 11.4% Adjusted Operating Margin 12.4%
Slide 10: Q1 Operating Results & Other Items
Q1 Operating Results & Other Items Adjusted Gross Margin Percentage Other Items 33% ($ in Millions) Q1 FY13 Q1 FY12 31% Interest Expense, Net $ (33) $ (34) 29% Q4 Q1 Q2 Q3 Q4 Q1 Adjusted Other Income, Net $ 5 $ 1 FY11 FY12 FY12 FY12 FY12 FY13 GM% 31.6% 29.7% 31.4% 31.0% 31.8% 31.6% Income Tax Benefi
Slide 11: Q1 Balance Sheet and Cash Flow Summary
Q1 Balance Sheet and Cash Flow Summary Free Cash Flow and Working Capital Liquidity, Cash & Debt ($ in Millions) Q1 FY13 Q1 FY12 ($ in Millions) Q1 FY13 Q1 FY12 Cash from Continuing Operations $ 393 $ 195 Beginning Cash Balance $ 1,589 $ 1,218 Free Cash Flow 304 79 Capital expenditures, net (124) (1
Slide 12: Q1 Book to Bill
Q1 Book to Bill Segment Q1 FY13 Q1 FY12 Transportation Solutions 1.03 1.01 Network Solutions Excl. Subsea Communications 0.98 0.96 Industrial Solutions 1.03 0.96 Consumer Solutions 1.03 0.95 Total Excl. Subsea Communications 1.02 0.98 page 12 / January 2013
Slide 13: Q2 Outlook
Q2 Outlook^ ($ in Millions, except per share amounts) Sales $3,200 to $3,300 Y/Y Growth Actual (2)% 2% Organic* (6)% (3)% Adjusted EPS* $0.68 to $0.72 Y/Y Growth 0% 6% Transportation Solutions – up mid single digits Industrial Solutions – up mid single digits Global auto production expected to be
Slide 14: FY13 Outlook
FY13 Outlook^ ($ in Millions, except per share amounts) Sales $13,300 to $13,700 Y/Y Growth Actual 0% 3% Organic* (2)% 1% Adjusted EPS* $3.05 to $3.25 Y/Y Growth 7% 14% Transportation Solutions – up mid single digits Industrial Solutions – up slightly Global auto production expected to be up sligh
Slide 15: Summary
Summary • Margins and free cash flow strong in Q1 • Order rates improving • Holding adjusted EPS guidance midpoint at ~10% growth versus FY12 • Expect to return > $1 billion of capital to shareholders in FY13 page 15 / January 2013
Slide 16: Q & A
O&A —TE —* page 16 / January 2013 connectivity
Slide 17: Appendix
Appendix page 17 / January 2013
Slide 18: Non-GAAP Measures
Non-GAAP Measures “Organic Sales Growth,” “Adjusted Gross Margin,” “Adjusted Gross Margin Percentage,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Other Income, Net,” “Adjusted Income Tax Expense,” “Adjusted Effective Tax Rate,” ”Adjusted Income from Continuing Operations,” “
Slide 19: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) We present income tax expense after adjusting for the tax effect of special items including charges related to restructuring and other charges, acquisition related charges, impairment charges, other income or charges, and certain significant special tax items, if any (“Adju
Slide 20: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) Net capital expenditures are subtracted because they represent long-term commitments. Voluntary pension contributions are subtracted from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity. Certain special items,
Slide 21: Net Sales Growth Reconciliation – Q1 13 vs. Q1 12
Net Sales Growth Reconciliation – Q1 13 vs. Q1 12 Percentage of Change in Net Sales for the Quarter Ended Decem ber 28, 2012 Segm ent's Total versus Net Sales for the Quarter Ended Decem ber 30, 2011 Net Sales for the Quarter Ended Organic (1) Translation (2) Acquisition Total Decem ber 28, 2012 ($
Slide 22: Net Sales Growth Reconciliation – Q1 13 vs. Q4 12
Net Sales Growth Reconciliation – Q1 13 vs. Q4 12 Percentage of Change in Net Sales for the Quarter Ended Decem ber 28, 2012 Segm ent's Total versus Net Sales for the Quarter Ended Septem ber 28, 2012 Net Sales for the Quarter Ended Organic (1) Translation (2) Total Decem ber 28, 2012 ($ in m illion
Slide 23: Net Sales Growth Reconciliation by Geography – Q1 13 vs. Q1 12
Net Sales Growth Reconciliation by Geography – Q1 13 vs. Q1 12 Change in Net Sales for the Quarter Ended Decem ber 28, 2012 versus Net Sales for the Quarter Ended Decem ber 30, 2011 (1) Organic Translation (2) Acquisition Total ($ in millions) Americas $ (22) (2.2)% $ (5) $ 69 $ 42 4.3% EMEA (55) (5
Slide 24: Reconciliation of Non-GAAP Measures – Quarter Ended December 28, 2012
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 28, 2012 Adjustm ents Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges Charges, Net Item s (1) (Non-GAAP) (2) ($ in m illions, except per share data) Operating Income (Lo
Slide 25: Reconciliation of Non-GAAP Measures – Quarter Ended December 30, 2011
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 30, 2011 Adjustm ents Acquisition Restructuring Related and Other Tax Adjusted (1) U.S. GAAP Charges Charges, Net Item s (Non-GAAP) (2) ($ in m illions, except per share data) Operating Income: Tr
Slide 26: Reconciliation of Non-GAAP Measures – Quarter Ended March 30, 2012
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 30, 2012 Adjustm ents Acquisition Restructuring Related and Other Adjusted U.S. GAAP Charges Charges, Net (Non-GAAP) (1) ($ in m illions, except per share data) Operating Income: Transportation Solut
Slide 27: Reconciliation of Non-GAAP Measures – Year Ended September 28, 2012
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 28, 2012 Adjustm ents Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Item s (2) (Non-GAAP) (3) ($ in m illions, except per share data) Operating Income:
Slide 28: Gross Margin & Gross Margin Percentage Reconciliation
Gross Margin & Gross Margin Percentage Reconciliation For the Quarters Ended Septem ber 30, Decem ber 30, March 30, June 29, Septem ber 28, Decem ber 28, 2011 2011 2012 2012 2012 2012 Net sales $ 3,753 $ 3,170 $ 3,249 $ 3,499 $ 3,364 $ 3,134 Cost of sales 2,569 2,227 2,228 2,481 2,300 2,145 Gross ma