Slide 1: 2007 Q3 Earnings Conference
2007 Q3 Earnings Conference October 25, 2007 Jeffrey T. Gill President and CEO T. Scott Hatton Vice President and CFO
Slide 2: Disclosures
Disclosures Safe Harbor Disclaimer Each “forward-looking statement” herein is subject to serious risks and should not be relied upon, as detailed in our most recent Form 10-K and Form 10-Q and subsequent SEC filings. Briefly, we currently believe that such risks also include: our ability to liquidat
Slide 3: Agenda
Agenda Overview Market Outlook Financial Discussion – Q3 2007 Results – Q4 2007 Outlook – Total Year 2007 Outlook – Wrap Up Q&A Session 2
Slide 4: Overview
Overview Q3 2007 Key Results – EPS at $0.14 was $0.18 better than Q3’06 and fell within guidance range ● Dana settlement approved by bankruptcy court in early-August ● Dana settlement contributed $7.5 million of pre-tax income to the quarter ● Margin improvement and reduced settlement costs offset
Slide 5: Overview
Overview Q3 2007 Key Results – Electronics backlog grew by 15% to $111 million – Test & Measurement segment posted revenue growth of 13% and gross margin improvement of 33% over Q3’06 – Settlement with Dana approved by bankruptcy court - $89.9 million claim Total Year 2007 Outlook – Guidance adj
Slide 6: Market Outlook
Market Outlook Industrial Group – ACT October Outlook largely unchanged from July – Heavy Duty Vehicles ● 2007 forecast of 218,000 vehicles, down 42% from 2006 ● 2008 forecast of 259,000 vehicles, up 19% from 2007 > Q4’08 up 45% over Q1’08 ● 2009 forecast of 382,000 vehicles, up 47% from 2008 and
Slide 7: Market Outlook
Market Outlook Industrial Group – Key Variables ● The economy ● Fuel prices ● Federal Reserve – The Challenge ● Prepare for substantial market expansion ● Relocate and launch new programs ● Continue with rebalancing of NA production ● Long-Term > Leverage NA market strength into Asia and Eastern E
Slide 8: Market Outlook
Market Outlook Electronics Group – Q3 orders grew 47% over Q2 and were 30% greater than a year ago ● Up 24% YTD over 2006 – Aerospace and Defense program launches showing mixed results ● New classified military product showing strong demand > Orders in A&D segment up 81% sequentially and 31% YTD >
Slide 9: Market Outlook
Market Outlook Electronics Group – Key Variables ● Aerospace and Defense > 2008 Defense Budget → $481.4 billion in discretionary authority, up 11.3% over 2007 → $93.4 billion supplemental for 2007; $141.7 billion for 2008 > Budget news is good - consistency of funds appropriations key ● Test & Mea
Slide 10: Conclusion
Conclusion Earnings per share increased $0.18 over prior year and were within guidance Revenue fell slightly below guidance driven by reduced demand for trailer components and a delay in shipments for certain classified programs – now scheduled for Q1‘08 Orders remained strong in our Electroni
Slide 11: Q3 2007 Results
Q3 2007 Results ($M, except EPS) Revenue Revenue EPS EPS Free Free Cash Cash Flow Flow $0.14 –$0.17 $108 - 113 $0.14 $105 - ($11) – (6) ($9) Guidance Actual Guidance Actual Guidance Actual Revenue down from forecast by $6 PBT & EPS within forecast range Cash Flow within forecast range SIG trailer
Slide 12: Q3 2007 vs. Prior Year
Q3 2007 vs. Prior Year ($M, except EPS) Revenue Revenue EPS EPS Free Free Cash Cash Flow Flow $0.14 $126 $105 $11 ($0.04) ($9) 2006 2007 2006 2007 2006 2007 Revenue down 17% PBT up $4.6; EPS up $0.18 Cash Flow down $20 SIG down 27% / (-$25) Dana settlement impact of $7.5 PBT Higher net income
Slide 13: Q4 2007 Outlook
Q4 2007 Outlook ($M, except EPS) Revenue Revenue EPS EPS Free Free Cash Cash Flow Flow $5 $107 - $112 $103 - $108 $0.01 - $0.03 ($5) – $0 ($0.05) - $0.00 Prior Guidance Current Fcst Prior Guidance Current Fcst Prior Guidance Current Fcst Revenue down $4 from prior guidance PBT down $1.7 or $0.06 EPS
Slide 14: Total Year 2007 Outlook
Total Year 2007 Outlook ($M, except EPS) Revenue Revenue EPS EPS Free Free Cash Cash Flow Flow $443 - $453 $0.01 - $0.06 $435 - $440 ($5) - $0 ($0.05) - $0.00 ($13) – ($8) Prior Guidance Current Fcst Prior Guidance Current Fcst Prior Guidance Current Fcst Revenue down $10 from prior guidance PBT dow
Slide 15: Wrap-Up
Wrap-Up Deliver on total year financial commitments – 1st half exceeded expectation; – Q3 EPS increased $0.18 over prior year and was within guidance – Despite revising outlook down $0.06 EPS for the total year, we are exceeding our original plan (excluding the Dana settlement) – Dana settlement h