Slide 1: Fiscal First Quarter 2016 Financial Results
FISCAL FIRST QUARTER 2016 FINANCIAL RESULTS January 21, 2016
Slide 2: Safe Harbor & Fair Disclosure Statement
SAFE HARBOR & FAIR DISCLOSURE STATEMENT 2 Any statements made during our call today and information included in the supporting material that is not historical in nature, such as statements in the future tense and statements that include "believe," "expect," "intend," "plan," "anticipate," and simila
Slide 3: Fiscal First Quarter Results
FISCAL FIRST QUARTER RESULTS 3 Q1F16 Guidance Oct 28, 2015 Q1F16 Jan 2, 2016 Q4F15 Oct 3, 2015 Q1F16 vs. Q4F15 Revenue ($ millions) $600 to $625 $617 $669 - 8% Non-GAAP Diluted EPS excluding restructuring $0.41 to $0.48 $0.47 $0.69 - 32% GAAP Diluted EPS $0.42 $0.70 - 40% ROIC 10.8% 14.0% - 320 bps
Slide 4: Margin Improvement Actions
MARGIN IMPROVEMENT ACTIONS Initial cost reduction and control efforts offset seasonal cost increases in Q2F16 Lower-margin program disengagements • October 29, 2015–announced disengagement of one program in our N/C sector and one program in our I/C sector Facility restructuring • November 4, 2015—an
Slide 5: Growth Opportunities
GROWTH OPPORTUNITIES Leverage strong customer Net Promotor Scores to drive share gains Our funnel of new opportunities improved to $2.3 billion • Highest level since Q1F14 • Strong at multiple sites, including newer facilities in Guadalajara, MX and Oradea, RO New program wins in Q1F16 were $179 mil
Slide 6: Fiscal Second Quarter Guidance
FISCAL SECOND QUARTER 6 Q2F16 Guidance Revenue $600 to $630 million Non-GAAP Diluted EPS $0.47 to $0.55 • Includes $0.11 stock-based compensation expense • Excludes restructuring costs Mid-point of revenue guidance suggests flat with prior quarter • Two previously announced program disengagements ma
Slide 7: Performance by Sector
PERFORMANCE BY SECTOR 7 Q1F16 Jan 2, 2016 Q4F15 Oct 3, 2015 Q1F16 vs. Q4F15 Q2F16 Expectations (percentage points) Networking/ Communications $157 25% $179 27% - 12% Down mid single Healthcare/ Life Sciences $191 31% $183 27% + 4% Flat Industrial/ Commercial $173 28% $201 30% - 14% Up low single Def
Slide 8: Manufacturing Wins by Region
MANUFACTURING WINS BY REGION 8 • $179M in annualized manufacturing revenue when fully ramped (34 programs) • Strength in AMER and EMEA with consistent sequential results in APAC $108M $47M $24M Q1F16 AMER APAC EMEA
Slide 9: Manufacturing Wins by Sector
MANUFACTURING WINS BY SECTOR • Robust wins in Industrial/Commercial and Healthcare/Life Sciences • Sector wins momentum supports healthy portfolio $21M $53M $77M $28M Q1F16 N/C HC/LS I/C D/S/A 9
Slide 10: Manufacturing Wins Momentum
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 % o f T F Q S a l e s N e w W i n s ( $ m i l l i o n s ) TFQ Wins TFQ Wins % of TFQ Sales New Wins MANUFACTURING WINS MOMENTUM Trailing Four Quarters (TFQ) for Manufacturing Wins Goal 25% TFQ $702M Quar
Slide 11: Manufacturing Funnel
MANUFACTURING FUNNEL • Manufacturing funnel of $2.3B at a two year high • HC/LS and I/C funnels particularly strong • Supports the delivery of a healthier portfolio $320.6 $914.1 $750.6 $313.4 Q1F16 N/C HC/LS I/C D/S/A 2,325 2,134 1,978 2,159 2,208 2,194 2,034 2,073 2,299 1,000 1,250 1,500 1,750 2,0
Slide 12: Key Operations Metrics
3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 450 500 550 600 650 700 Q1F13 Q2F13 Q3F13 Q4F13 Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16* R e v e n u e ( $ m i l l i o n s ) Revenue Operating Margin KEY OPERATIONS METRICS Operating Margin Target Range: 4.7 to 5.0% *represents midpoint of guidance 1
Slide 13: Operating Margin
3.6% - 4.0% 3.30% - 3.60% 4.7% - 5.0% (Goal = 5.0%) 3.3% - 3.6% 0.3% 0.3% - 0.7% 0.2% 0.1% 0.2% 3.7% 0.3% - 0.7% (0.4%) Q1F16 Operating Margin Guidance Q1F16 Cost Reduction Benefits Q1F16 Operating Margin Results Q2F16 Cost Reduction Benefits Seasonal Costs Q2F16 Operating Margin Guidance Fremont an
Slide 14: Fiscal First Quarter Income Statement
FISCAL FIRST QUARTER INCOME STATEMENT 14 Q1F16 Comments Revenue $617 million Above mid-point of guidance range from stronger revenue in the Networking/Communications sector Gross margin 8.1% Above guidance range by 10 bps from improved fixed cost absorption and productivity improvements Selling & ad
Slide 15: Balance Sheet and Cash Flows
BALANCE SHEET AND CASH FLOWS 15 Q1F16 Comments Return on invested capital 10.8% Slightly below fiscal 2016 WACC of 11% Share repurchases $8.5 million ~ 227,000 at an average price of $37.23 per share Free cash flow $9.5 million Cash from operations: $21.3 million Capital expenditures: $11.8 million
Slide 16: Working Capital Trends
Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Inventory Days 83 84 84 80 82 86 88 85 88 A/R Days 51 49 48 44 52 48 48 53 53 A/P Days 64 63 67 60 53 63 62 60 59 Customer Deposit Days 8 8 8 8 9 12 12 12 11 Net Cash Cycle Days 62 62 57 56 72 59 62 66 71 WORKING CAPITAL TRENDS 16
Slide 17: Fiscal Second Quarter 2016 Guidance
FISCAL SECOND QUARTER 2016 GUIDANCE 17 Guidance Revenue $600 to $630 million Non-GAAP diluted EPS $0.47 to $0.55 Gross margin 8.1% to 8.4% SG&A $27 to $28 million Operating margin * 3.6% to 4.0% Depreciation ~ $12 million Q2 tax rate * F16 tax rate * 12% to 14% 11% to 13% Cash cycle days 68 to 72 da
Slide 18: Q&A
Q&A ANALYSTS PLEASE CONFORM TO: ONE QUESTION ONE FOLLOW-UP THANKS