Slide 1: Q4-19 and 2019 Earnings Call
| 1 Q4 - 19 and 2019 Earnings Call February 6, 2020
Slide 2: Forward-looking statements and non-GAAP disclosure
| 2 | 2 This press release contains forward - looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “expect,” “estimate,” “anticipate,” “could” “predict” and similar expressions, and the negatives thereof,
Slide 3: CEO Perspective
| 3 CEO Perspective Jeff Benck President & Chief Executive Officer
Slide 4: Fourth Quarter and 2019 Summary
| 4 Fourth Quarter and 2019 Summary Better than expected quarterly results in Semi - cap Year - over - year growth in Semi - cap and A&D in Q4 Medical revenues up >14% annually Momentum in Targeted Higher - value Markets Go - to - Market organization making progress Sector strategies drivi
Slide 5: Q4-19 Notable New Business Wins by Market Sector
| 5 Q4 - 19 Notable New Business Wins by Market Sector Continued Progress in Capturing the Right Mix Industrials Facial imaging instrument (mfg.) Security scanning system (design & mfg.) Medical Advanced DNA testing platform ( process design & mfg.) Defibrillator product (mfg .) Fetal moni
Slide 6: CFO Updates & Q4-19 and 2019 Financial Highlights
| 6 CFO Updates & Q4 - 19 and 2019 Financial Highlights Roop Lakkaraju Chief Financial Officer
Slide 7: Fourth Quarter 2019 Financial Summary
| 7 Fourth Quarter 2019 Financial Summary See APPENDIX 1 for a reconciliation of GAAP to non - GAAP Financial Results For the Three Months Ended (In millions, except EPS) Dec. 31 , 2019 Sept. 30 , 2019 Q/Q Dec. 31 , 2018 Y/Y Net Sales $508 $555 (8%) $657 (23%) GAAP Operating Margin (1.8%) 1.8% (360
Slide 8: Revenue by Market Sector (Three Months)
| 8 Revenue by Market Sector For the Three Months Ended Higher - Value Markets Dec. 31 , 2019 Sept. 30 , 2019 Q/Q Dec. 31 , 2018 Y/Y Industrials 21% $107 21% $115 (6%) 18% $121 (11%) Aerospace & Defense 21% $106 21% $115 (8%) 16% $105 1% Medical 20% $103 23% $128 (20%) 16% $104 (1%) Semi - Cap 16% $
Slide 9: GAAP Key Business Trends
| 9 GAAP Key Business Trends 15.3 16.1 11.9 9.8 - 9.3 2.3% 2.7% 2.0% 1.8% - 1.8% -3.0% -1.0% 1.0% 3.0% 5.0% 7.0% -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 34.0 33.8 35.3 34.9 37.7 5.2% 5.6% 5.9% 6.3% 7.4% 0.0% 2.0% 4.0% 6.0% 8.0% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70
Slide 10: Non-GAAP Key Business Trends
| 10 21.1 17.3 18.5 18.0 13.3 3.2% 2.9% 3.1% 3.2% 2.6% 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 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 657 603 602 555 508 8.4% 8.8% 8.9% 9.5% 8.0% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 0 200 400 600 800 1,000 1,200 1,400 Q4-18 Q1-19
Slide 11: 2019 Financial Summary
| 11 (In millions, except EPS) Dec. 31 , 2019 Dec. 31 , 2018 Q’18 to ‘19 Y/Y Net Sales $2,268 $2,566 ($298) (12%) Non - GAAP Gross Profit $200 $221 ($21) (10%) Non - GAAP Gross Margin % 8.8% 8.6% (20 bps) Non - GAAP SG&A $133 $141 ($8) (6%) Non - GAAP SG&A % 5.9% 5.5% 40 bps Non - GAAP Operating Pro
Slide 12: Revenue by Market Sector (Twelve Months)
| 12 Revenue by Market Sector For the Twelve Months Ended ($M) Higher - Value Markets Dec. 31 , 2019 Dec. 31 , 2018 Y/Y Industrials 20% $454 19% $493 (8%) Aerospace & Defense 19% $432 16% $406 6% Medical 20% $448 15% $394 14% Semi - Cap 12% $278 14% $355 (22%) Total Revenue $1,612 $1,648 (2%) Tradit
Slide 13: Cash Flow / Working Capital Highlights
| 13 Cash Flow / Working Capital Highlights For the Twelve Months Ended For the Three Months Ended (1) Free cash flow (FCF) defined as net cash provided by (used in) operations less capex (In millions, except EPS) Dec. 31 , 2019 Dec. 31, 2018 Dec. 31 , 2019 Sept. 30 , 2019 Dec. 31, 2018 Cash Flows f
Slide 14: Working Capital Update
| 14 Working Capital Update Q4 - 17 Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 Q1 - 19 Q2 - 19 Q3 - 19 Q4 - 19 Accounts Receivable Days 59 59 61 64 64 61 54 56 57 Contract Asset Days 20 22 20 22 19 23 23 26 29 Inventory Days 40 50 47 49 46 52 52 57 61 Deposits 3 3 2 4 4 3 3 7 7 Accounts Payable Days 54 60 57 5
Slide 15: Capital Allocation Update
| 15 Capital Allocation Update Dividends Recurring quarterly dividend of $0.15 per share declared Dividend of $5.6 million paid in October 2019 Share Repurchases Share repurchases of $122 million completed as of December 31, 2019 Remaining authorization to repurchase shares of $79 million at
Slide 16: First Quarter 2020 Guidance
| 16 First Quarter 2020 Guidance * The above guidance excludes the impact of amortization of intangible assets and estimated restructuring charges and other costs Guidance Net Sales (in millions) $ 530 – $570 Diluted EPS – non - GAAP* $0.32 – $ 0.38
Slide 17: Sequential Modeling Information
| 17 Sequential Modeling Information Higher - Value Markets Q1 - 20 Outlook (%) Industrials Up High Singles Aerospace & Defense Up > 15% Medical Up > 20% Semi - Cap Up Low Singles Traditional Markets Q1 - 20 Outlook (%) Computing Flat Telecommunication s Down > 10% Q1 - 20 Guidance Operating Margin
Slide 18: 2020 Goals and Initiatives
| 18 2020 Goals and Initiatives Jeff Benck - CEO
Slide 19: 2020 Expectations
| 19 2020 Expectations Overcoming revenue loss from exit of the legacy computing contract Higher - value market growth >10% to ~80% of total revenue Modest Year - over - Year Revenue Growth Targeting full year non - GAAP gross margins in the 9.2% to 9.6% range SG&A expenses in the range of $
Slide 20: Key Strategic Initiatives
| 20 Key Strategic Initiatives Change the relationship with our customers; differentiate with technology Revenue at the right target margin profile Focus on the Customer Be the best at what we do Effective asset utilization and margin expansion Drive Enterprise Efficiencies Invest in Peopl
Slide 21: Appendix
Appendix Benchmark. | 21
Slide 22: Appendix 1 - Reconciliation of GAAP to non-GAAP Financial Results
| 22 (Amounts in Thousands, Except Per Share Data) – (UNAUDITED) APPENDIX 1 - Reconciliation of GAAP to non - GAAP Financial Results This amount represents the tax impact of the non - GAAP adjustments using the applicable effective tax rates. This amount represents the impact of repatriating for
Slide 23: Appendix - Reconciliation of GAAP to Non-GAAP Financial Measures
| 23 (Amounts in Thousands) – (UNAUDITED) APPENDIX 2 - Reconciliation of GAAP to Non - GAAP Financial Measures Twelve Month Ended Three Months Ended Dec. 31 , 2019 Dec. 31 , 2018 Dec. 31 , 2019 Sept. 30 , 2019 Dec. 31, 2018 GAAP Gross Profit $200,406 $ 220,593 $40,725 $52,883 $55,199 Settlement - -
Slide 24: Appendix - Reconciliation of Free Cash Flow
| 24 (Amounts in Thousands) – (UNAUDITED) APPENDIX 3 - Reconciliation of Free Cash Flow Twelve Months Ended Three Months Ended Dec. 31, 2019 Dec. 31, 2018 Dec. 31 , 2019 Sept. 30 , 2019 Dec. 31, 2018 Net Cash Provided by (Used in) Operations $93,136 $76,687 $35,822 ($11,458) $93,980 Additions to pro