Slide 1: Q4 and FY 2016 Earnings Presentation
design develop deliver advanced technology Q4 and FY 2016 Earnings Presentation February 8, 2017
Slide 2: Forward-Looking Statements
design develop deliver advanced technology 2 Forward - Looking Statements This document contains forward - looking statements within the scope of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “expect,” “estimate,” “anticipate,” “predict” and similar expressions, and t
Slide 3: CEO Update
design develop deliver advanced technology 3 CEO Update
Slide 4: Fourth Quarter 2016 Summary
design develop deliver advanced technology 4 Fourth Quarter 2016 Summary Revenue and operating margins at the top end of guidance ▪ Stronger than expected Test & Instrumentation and Computing demand ▪ Historical high g ross margin of 9.5%, a 30 bps Q2Q improvement Exceeded working capital target ▪ A
Slide 5: 2016 New Business Wins by Segment
design develop deliver advanced technology 5 2016 New Business Wins by Segment ▪ 1 9 manufacturing and 12 engineering project awards ▪ Estimated annual revenue run rate between $115 – $140 million ▪ Continued new business wins in targeted markets Estimated Annual Revenue from New Business Wins New B
Slide 6: 2016 Financial Summary
design develop deliver advanced technology 6 (In millions, except EPS) Dec 31 , 2016 Dec 31 , 2015 ‘15 to ’16 Y/Y Net Sales $2,310 $2,541 ($231) (9%) Gross Margin $213 $219 ($6) (3%) Gross Margin % 9.2% 8.6% 60 bps SG&A $113 $107 $6 6% SG&A % 4.9% 4.2% 70 bps Non - GAAP Operating Income $100 $112
Slide 7: Keys to Higher ROIC: 2016 Results
design develop deliver advanced technology 7 Keys to Higher ROIC: ▪ Drive higher revenues with balanced mix ▪ Optimize base ▪ Continue cash conversion cycle improvement 112 100 4.4% 4.3% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0 50 100 150 200 250 2015 2016 2,541 2,310 8.6% 9.2% 1.0% 3.0% 5.0% 7.0%
Slide 8: CEO Observations
design develop deliver advanced technology 8 CEO Observations • Unique set of highly leverageable assets • Strong customer engagements and a dedicated/ motivated workforce • Federation of sites, built by acquisition of distressed assets and managed independently • Regional company with international
Slide 9: 2017: Our Priorities in a Transition Year
design develop deliver advanced technology 9 2017: Our Priorities in a Transition Year Long - Term Revenue Growth ▪ Leverage engineering solutions for higher margin engagements ▪ Balance mix of higher - value and traditional market opportunities ▪ Reorient to a market sector - focused sales organiza
Slide 10: Our Financial Goals
design develop deliver advanced technology 10 Our Financial Goals Revenue Gross Margin SG&A Non - GAAP Operating Income ROIC Cash Conversion Cycle $2.8 – $3.2B 9.8 – 10% 4.8 – 4.5% >5.5% >12% <70 Days Target Business Model
Slide 11: Progress Milestones
design develop deliver advanced technology 11 Progress Milestones Revenue Revenue Mix Gross Margin SG&A Profit per Sq Ft Bookings >$250M/Qtr >70% Higher - Value Markets 9.8 – 10% 4.5 – 4.8% >$45 Target Bookings >$150M/Qtr >66% >9.5% ~5% ~$32 Waypoint (2H 2017) $125M/ Q tr 63% 9.2% 4.9% $27 Current (
Slide 12: Balanced Capital Deployment
design develop deliver advanced technology 12 Balanced Capital Deployment Focus on Generating Cash from Operations ▪ Continued emphasis on cash conversion cycle improvements Target range of 73 to 68 days ▪ Anticipate 2017 cash from operations in the range of $125 - 150 million Strong Balance Sheet
Slide 13: Q4 & 2016 Financial Highlights
design develop deliver advanced technology 13 Q4 & 2016 Financial Highlights
Slide 14: Fourth Quarter 2016 Financial Summary
design develop deliver advanced technology 14 (In millions, except EPS) Dec 31 , 2016 Sep 30 , 2016 Q/Q Dec 31 , 2015 Y/Y Net Sales $608 $574 6% $626 (3%) Non - GAAP Operating Margin 4.8% 4.3% 50 bps 4.8% --- Non - GAAP Diluted EPS $0.45 $0.36 25% $0.48 (6%) GAAP Operating Margin 3.9% 3.1% 80 bps 3.
Slide 15: Benchmark Revenue Results by Market Sector (Quarter)
design develop deliver advanced technology 15 Higher - Value Markets Dec 31 , 2016 Sep 30 , 2016 Q/Q Industrials 37% $230 38% $217 6% Medical 14% $86 15% $86 --- Test & Instrument. 11% $65 11% $66 (1%) Total Revenue $381 $369 3% Traditional Markets Dec 31 , 2016 Sep 30 , 2016 Q/Q Computing 20% $120
Slide 16: Key Business Trends
design develop deliver advanced technology 16 30.1 21.9 24.3 24.7 29.1 4.8% 4.0% 4.2% 4.3% 4.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 626 549 579 574 608 9.1% 9.2% 9.1% 9.2% 9.5% 1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 0 200 400 60
Slide 17: Fiscal Year 2016 Financial Summary
design develop deliver advanced technology 17 (In millions, except EPS) Dec 31 , 2016 Dec 31 , 2015 Y/Y Net Sales $2,310 $2,541 (9%) Non - GAAP Operating Margin 4.3% 4.4% (10 bps) Non - GAAP Diluted EPS $1.45 $1.68 (14%) GAAP Operating Margin 3.3% 3.7% (40 bps) GAAP Diluted EPS $1.29 $1.83 (30%) ROI
Slide 18: 2016 Revenue Results by Market Sector
design develop deliver advanced technology 18 Higher - Value Markets Dec 31 , 2016 Dec 31 , 2015 Y/Y Industrials 38% $874 32% $820 7% Medical 15% $346 14% $351 (1%) Test & Instrument. 11% $244 9% $224 9% Total Revenue $1,464 $1,395 5% Traditional Markets Dec 31 , 2016 Dec 31 , 2015 Y/Y Computing 19%
Slide 19: Cash Flow / Working Capital Highlights
design develop deliver advanced technology 19 (In millions) Dec 31, 2016 Dec 31, 2015 Dec 31 , 2016 Sep 30 , 2016 Dec 31, 2015 Cash Flows from (used in) Operations $273 $147 $44 $70 $28 FCF $240 $109 $38 $61 $23 Cash $681 $466 $681 $636 $466 International $626 $424 $626 $592 $424 US $55 $42 $55 $44
Slide 20: Working Capital Update
design develop deliver advanced technology 20 Working Capital Update Exceeded 75 - day target exiting the year 99 91 90 94 99 83 80 75 74 25 45 65 85 105 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Target Q4-16 Accounts Receivable Days Accounts Payable Days Inventory Days Q1-15 Q2-15 Q3-15 Q4-15 Q1-16
Slide 21: Share Repurchases
design develop deliver advanced technology 21 Share Repurchases 38 th Consecutive Quarter of Stock Repurchases $ 532 million returned to shareholders since 2007 $93 m illion remaining on authorized purchase plan Inception to 2016 2011 - 2016 Last 3 Years $US Stock Repurchases (M ) $532 $299 $154 Buy
Slide 22: First Quarter 2017 Guidance
design develop deliver advanced technology 22 Guidance Net Sales (in millions) $530 – $550 Operating Margin – non - GAAP* 3.0% – 3.4% Diluted EPS – non - GAAP* $0.24 – $0.28 * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges – See Append
Slide 23: Q1-17 Market Outlook and Modeling Information
design develop deliver advanced technology 23 Higher - Value Markets Q1 - 17 Outlook (%) Industrials Down High - Singles Medical Up Mid - Singles Test & Instrumentation Up >10% Traditional Markets Q1 - 17 Outlook (%) Computing Down >30% Telecommunication s Down >15% Benchmark Modeling Information Ex
Slide 24: Appendix
design develop deliver advanced technology 24 Appendix
Slide 25: Reconciliation of GAAP to non-GAAP Financial Results
design develop deliver advanced technology 25 APPENDIX 1 - Reconciliation of GAAP to non - GAAP Financial Results (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) Dec 31, Sep 30, Dec 31, 2016 2016 2015 2016 2015 $ 23,548 $ 18,082 $ 21,905 $ 75,638 $ 92,969 2,663 3,485 6,308 12,539 13,861