Slide 1: Q3 2012 Earnings Call July 25, 2012
Q3 2012 Earnings Call July 25, 2012
Slide 2: Forward-Looking Statements and Non-GAAP Measures
page 2 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 a
Slide 3: Summary
Summary Q3 Sales of $3.50 billion; Adjusted EPS of $0.79; Free cash flow of $414 million Sales increased 8% sequentially, up in all segments but slightly below guidance range Weaker Euro negatively impacted sales by $50 million (150 basis points) vs. guidance Adjusted EPS and adjusted operating marg
Slide 4: New Segments Effective FY 2013
INDUSTRIAL SOLUTIONS NETWORK SOLUTIONS CONSUMER SOLUTIONS TRANSPORTATION SOLUTIONS Automotive Deutsch Industrial Vehicle Industrial Energy Aerospace, Defense & Marine Deutsch Aerospace & Offshore Telecom Enterprise Data Communications Subsea Communications Consumer Devices Appliance New Segments Eff
Slide 5: Q3 Revenue Summary
page 5 / July 2012 Q3 Revenue Summary ($ in Millions) Sequential growth in all segments and regions 975 Asia Pacific Y/Y Q/Q Segment Q3 FY12 Q2 FY12 Q3 FY11 Change Change Transportation Solutions $ 1,607 $ 1,457 $ 1,426 13% 10% Communications & Industrial Solutions 1,045 975 1,184 (12%) 7% Network S
Slide 6: Transportation Solutions
page 6 Transportation Solutions Organic sales growth is a non-GAAP measure; see Appendix for description and reconciliation. / July 2012 Automotive Organic sales growth by region Asia up 22%, China up 19% Americas up 11% EMEA down 4% Global OEM production of ~20.5 million vehicles, up 10% vs. prior
Slide 7: Communications & Industrial Solutions (CIS)
page 7 Communications & Industrial Solutions (CIS) Industrial Slowdown in commercial building, factory automation and rail markets Up 5% sequentially; Americas and Asia up with EMEA flat on an organic basis Consumer Devices Softness in demand for PCs and consumer electronics partially offset by stro
Slide 8: Network Solutions
page 8 Network Solutions Organic sales growth is a non-GAAP measure; see Appendix for description and reconciliation. Enterprise Networks Weak office network demand partially offset by data center growth Subsea Communications Expect Q4 sales of ~$120 million / July 2012 Telecom Networks Reduced wire
Slide 9: Q3 Financial Summary
page 9 / July 2012 Q3 Financial Summary ($ 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. $ 490 Q3 FY12 Q2 FY12 Q3 FY11 Net Sales $ 3,499 $ 3,249 $ 3,579 Deutsch Char
Slide 10: Q3 Operating Results
page 10 Q3 Operating Results Adjusted Gross Margin Performance Gross margin percentage in line with guidance Expect Q4 adjusted gross margin of 31%+ Operating Expense Performance Expect Q4 RD&E of ~5% and SG&A of ~12.5% as percent of sales Adjusted Gross Margin Percentage is a non-GAAP measure; see
Slide 11: Q3 Other Items
Q3 Other Items Net Interest Expense Expect ~$41 million in Q4 Expect ~$8 million reduction in quarterly net interest expense after payoff of ~$700 million of notes maturing in October Other Income, Net Relates to Tax Sharing Agreement Expect ~$11 million in Q4 Income Taxes on Adjusted Income Expect
Slide 12: Q3 Free Cash Flow and Working Capital
Q3 Free Cash Flow and Working Capital Capital spending expected to be ~4% for 2012 Expect Free Cash Flow of > $1.3 billion in FY12 ($ in Millions) Free Cash Flow is a non-GAAP measure; see Appendix for description. Working capital levels improved as expected page 12 / July 2012 Q3 FY12 Q3 FY11 Cash
Slide 13: Q3 Liquidity, Cash and Debt
Q3 Liquidity, Cash and Debt ($ in Millions) Dividends $0.21 per share paid in June Deutsch funding of ~$2 billion Sale of Touch and Services completed - $394 million in proceeds Share repurchases to restart in Q4 Expecting ~$3 billion of debt in fiscal 2013 Free Cash Flow is a non-GAAP measure; see
Slide 14: Q3 Orders Summary
page 14 Q3 Orders Summary / July 2012 ($ in Millions) Segment Q3 FY12 Q2 FY12 Q3 FY11 Y/Y Change Q/Q Change Transportation Solutions 1,615 $ 1,488 $ 1,433 $ 13% 9% Book to Bill 1.01 1.02 1.00 Communications & Industrial Solutions 1,011 983 1,184 (15)% 3% Book to Bill 0.97 1.01 1.00 Network Solutions
Slide 15: Q4 2012 Outlook
page 15 Q4 2012 Outlook* Q4 Outlook* Transportation Solutions down slightly sequentially due to seasonality; no change from prior outlook Estimated auto production of ~19.5 million vehicles Deutsch sales of ~$180 million Network Solutions down ~3% sequentially Telecom down about 5%; carrier spending
Slide 16: Full Year 2012 Outlook
page 16 Full Year 2012 Outlook* Full Year 2012 Outlook* * Assumes current commodity and currency exchange rates. Adjusted EPS and Organic Sales Growth are non-GAAP measures; see Appendix for description. Growth comparisons to prior year exclude the impact of an additional week in the fourth quarter
Slide 17: Q & A
page 17 Q & A / July 2012
Slide 18: Appendix
Appendix =TE page 8 / diy 2012
Slide 19: Non-GAAP Measures
page 19 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 Operat
Slide 20: Non-GAAP Measures (cont.)
page 20 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 an
Slide 21: Non-GAAP Measures (cont.)
page 21 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
Slide 22: Net Sales Growth Reconciliation – Q3 vs. Q3
page 22 Net Sales Growth Reconciliation – Q3 12 vs. Q3 11 / July 2012 Translation (2) Acquisition Transportation Solutions (3) : Automotive 85 $ 6.9 % (73) $ 96 $ 108 $ 8.7 % 84 % Aerospace, Defense, and Marine 1 0.2 (6) 78 73 39.0 16 Total 86 6.1 (79) 174 181 12.7 100 % Communications and Industria
Slide 23: Net Sales Growth Reconciliation – Q3 vs. Q2
page 23 Net Sales Growth Reconciliation – Q3 12 vs. Q2 12 / July 2012 Translation (2) Acquisition Transportation Solutions (3) : Automotive (10) $ (0.9) % (15) $ 96 $ 71 $ 5.6 % 84 % Aerospace, Defense, and Marine 1 0.3 - 78 79 43.6 16 Total (9) (0.6) (15) 174 150 10.3 100 % Communications and Indus
Slide 24: Non-GAAP Reconciliation, Quarter Ended June 29, 2012
page 24 Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 29, 2012 / July 2012 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 183 $ 94 $
Slide 25: Non-GAAP Reconciliation, Quarter Ended June 24, 2011
page 25 Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 24, 2011 / July 2012 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 211 $ - $ (
Slide 26: Non-GAAP Reconciliation, Quarter Ended March 30, 2012
page 26 Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 30, 2012 / July 2012 Acquisition Restructuring Related and Other Adjusted U.S. GAAP Charges Charges, Net (Non-GAAP) (1) Operating Income: Transportation Solutions 227 $ 4 $ 2 $ 233 $ Communic
Slide 27: Non-GAAP Reconciliation, Year Ended September 30, 2011
page 27 Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 30, 2011 / July 2012 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 848 $ - $
Slide 28: Non-GAAP Reconciliation, Quarter Ended September 30, 2011
page 28 Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 30, 2011 / July 2012 Acquisition Restructuring Related and Other Adjusted U.S. GAAP Charges (1) Charges, Net (Non-GAAP) (2) Operating Income: Transportation Solutions 237 $ - $ 4 $ 241 $
Slide 29: Gross Margin & Gross Margin Percentage Reconciliation
page 29 Gross Margin & Gross Margin Percentage Reconciliation / July 2012 For the Quarters Ended September 26, September 25, September 24, September 30, December 30, March 30, June 29, 2008 2009 2010 2011 2011 2012 2012 ($ in millions) Net sales 13,927 $ 9,926 $ 11,681 $ 13,778 $ 3,170 $ 3,249 $ 3,4
Slide 30: Non-GAAP Reconciliation, 13 Week Quarter Ended September 30, 2011
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the 13 Week Quarter Ended September 30, 2011 page 30 / July 2012 Adjustment Acquisition Restructuring 14 Weeks 13 Weeks 14 Weeks Related and Other Adjusted Impact of Adjusted U.S. GAAP Charges (1) Charges, Net Tax Items (No
Slide 31: Non-GAAP Reconciliation, 52 Week Year Ended September 30, 2011
page 31 Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the 52 Week Year Ended September 30, 2011 / July 2012 Adjustment Acquisition Restructuring 53 Weeks 52 Weeks 53 Weeks Related and Other Adjusted Impact of Adjusted U.S. GAAP Charges (1) Charges, Net Tax Items (2) (N