Slide 1: Fiscal Third Quarter 2016 Financial Results
FISCAL THIRD QUARTER 2016 FINANCIAL RESULTS July 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 Third Quarter Results
FISCAL THIRD QUARTER RESULTS 3 Q3F16 Guidance Apr 20, 2016 Q3F16 Jul 2, 2016 Q2F16 Apr 2, 2016 Q3F16 vs. Q2F16 Revenue ($ millions) $640 to $670 $668 $619 + 8% Diluted EPS $0.76 $0.50 + 52% Non‐GAAP Diluted EPS excluding restructuring $0.73 to $0.81 $0.82 $0.55 + 49% ROIC 13.0% 11.6% + 140 bps • Seq
Slide 4: Fiscal Fourth Quarter Guidance
FISCAL FOURTH QUARTER 4 Q4F16 Guidance Revenue $655 to $685 million Non‐GAAP Diluted EPS $0.76 to $0.84 • Includes $0.11 stock‐based compensation expense • Excludes restructuring charges and other special items Mid‐point of revenue guidance suggests flat to a modest sequential increase • New program
Slide 5: Key Operations Metrics
KEY OPERATIONS METRICS Operating Margin Target Range: 4.7% to 5.0% * Represents midpoint of guidance 5 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 Q3F16 Q4F16* R e v e n u e $ M Revenue Adjusted Operating M
Slide 6: Adjusted Operating Margin Q1F16 – Q3F16
4.70% ‐ 5.00% Goal = 5.00% 3.5% 20 bps 20 bps 10 bps 90 bps 4.9% 20 bps 10 bps 20 ‐ 50 bps Q1F16 Operating Margin Guidance Midpoint Guadalajara Ramp Operating Expenses Livingston Restructuring Benefits Productivity Improvements Q3 Results Fremont Restructuring Benefits EMEA Growth Growth Investments
Slide 7: Performance by Sector
PERFORMANCE BY SECTOR 7 Q3F16 Jul 2, 2016 Q2F16 Apr 2, 2016 Q3F16 vs. Q2F16 Q4F16 Expectations (percentage points) Networking/ Communications $156 23% $157 25% ‐ 1% Down low double Healthcare/ Life Sciences $207 31% $190 31% + 9% Down low single Industrial/ Commercial $202 30% $169 27% + 20% Up high
Slide 8: Manufacturing Wins by Region
MANUFACTURING WINS BY REGION 8 • $194M in annualized manufacturing revenue when fully ramped (46 programs) • Best quarterly wins result since Q2F15 • Strength in AMER and APAC regions $113M $75M $6M Q3F16 AMER APAC EMEA Wins Momentum = TFQ Wins / TFQ Revenue
Slide 9: Manufacturing Wins by Sector
MANUFACTURING WINS BY SECTOR • Sustained robust wins in Industrial/Commercial • Sector wins momentum supports healthy portfolio $32M $45M $95M $22M Q3F16 N/C HC/LS I/C D/S/A 9
Slide 10: Manufacturing Wins Momentum
MANUFACTURING WINS MOMENTUM Trailing Four Quarters (TFQ) for Manufacturing Wins TFQ $714M 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 Goal 25% Quar
Slide 11: Manufacturing Funnel
MANUFACTURING FUNNEL • Manufacturing funnel healthy at $2.3B • HC/LS and I/C funnels particularly strong • Supports the delivery of our differentiated portfolio 11
Slide 12: Income Statement
INCOME STATEMENT 12 Q3F16 Comments Revenue $668 million High end of guidance range from stronger revenue across most sectors Gross margin 9.4% Within guidance range; sequential improvement of 75 basis points from better leverage and productivity improvement initiatives Selling & administrative expen
Slide 13: Balance Sheet and Cash Flows
BALANCE SHEET AND CASH FLOWS 13 Q3F16 Comments Return on invested capital 13.0% 200 basis points above fiscal 2016 WACC of 11% Share repurchases $7.2 million ~ 170,000 at an average price of $42.13 per share Free cash flow $24.3 million Cash from operations: $31.3 million Capital expenditures: $7.0
Slide 14: Working Capital Trends
WORKING CAPITAL TRENDS 14 Q1F14 Q2F14 Q3F14 Q4F14 Q1F15 Q2F15 Q3F15 Q4F15 Q1F16 Q2F16 Q3F16 Inventory Days 83 84 84 80 82 86 88 85 88 91 87 A/R Days 51 49 48 44 52 48 48 53 53 48 51 A/P Days 64 63 67 60 53 63 62 60 59 62 62 Customer Deposit Days 8 8 8 8 9 12 12 12 11 11 13 Net Cash Cycle Days 62 62
Slide 15: Fiscal Fourth Quarter 2016 Guidance
FISCAL FOURTH QUARTER 2016 GUIDANCE 15 Guidance Revenue $655 to $685 million Non‐GAAP diluted EPS $0.76 to $0.84 Gross margin 9.4% to 9.7% SG&A $30 to $31 million Adjusted operating margin * 4.8% to 5.1% Depreciation ~ $12 million Q4 tax rate * F16 tax rate * 9% to 11% 10% to 12% Cash cycle days 64
Slide 16: Q&A
Q&A ANALYSTS PLEASE CONFORM TO: ONE QUESTION ONE FOLLOW‐UP THANKS