Slide 1: Q2 2012 Earnings Call
Q2 2012 Earnings Call April 25, 2012 EVERY CONNECTION COUNTS
Slide 2: Forward-Looking Statements and Non-GAAP Measures
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 are subj
Slide 3: Summary
Summary Q2 Sales of $3.25 billion; Adjusted EPS of $0.68; Free cash flow $379 million Above Adjusted EPS guidance of $0.62 to $0.66 Strong results in Transportation Solutions segment Adjusted operating margin of 13% Sequential improvement in all segments Continue to strengthen portfolio Deutsch Grou
Slide 4: Deutsch Update
Deutsch Update Strategic Rationale Deutsch brings a range of highly-engineered solutions for harsh environment applications Key circular connector product line Provides products for applications in long-cycle industries with strong secular trends Significant value for shareholders with expected reve
Slide 5: Q2 Revenue Summary
Q2 Revenue Summary ($ in Millions) Achieved High-End of Guidance Due to Strength in Transportation 3% (3%) $3,339 $3,170 $3,249 Total 3% (6%) 871 791 817 Network Solutions 0% (12%) 1,111 974 975 Communications & Industrial Solutions 4% 7% $1,357 $1,405 $1,457 Transportation Solutions Change Change Q
Slide 6: Transportation Solutions
Transportation Solutions Automotive Organic sales growth by region Americas up 12% Asia up 13%, China up 9% EMEA up 4% Global OEM production of ~21 million vehicles, up 4% vs. prior year Aerospace, Defense & Marine Strong growth in commercial aerospace and oil & gas markets Flat sales in military ma
Slide 7: Communications & Industrial Solutions (CIS)
Communications & Industrial Solutions (CIS) Industrial Distributor inventory adjustments Continued softness in EMEA and Asia demand Consumer Devices Declines year-over-year driven by low penetration in the smartphone market and PC market declines Partially offset by growth in tablets Organic sales g
Slide 8: Network Solutions
Network Solutions Organic sales growth is a non-GAAP measure; see Appendix for description and reconciliation. Enterprise Networks Weaker office network demand partially offset by data center growth Subsea Communications Delays in funding of awarded projects Expect Q3 to be at Q2 sales levels Teleco
Slide 9: Q2 Financial Summary
Q2 Financial Summary ($ 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. Q2 FY12 Q1 FY12 Q2 FY11 Net Sales $3,249 $3,170 $3,339 Operating Income $385 $361 $392 Restruct
Slide 10: Q2 Operating Results
Q2 Operating Results Adjusted Gross Margin Performance Gross margin percentage improvement due to fall through on sales volume and productivity Expect Q3 adjusted gross margin of ~31% Operating Expense Performance Expect Q3 RD&E of ~5% and SG&A of ~12% as percent of sales Adjusted Gross Margin Perce
Slide 11: Q2 Other Items
Q2 Other Items Net Interest Expense Expect ~$42 million in Q3 and Q4 due to temporary increase in debt levels 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 ~$9 millio
Slide 12: Q2 Free Cash Flow and Working Capital
Q2 Free Cash Flow and Working Capital Capital spending of ~4% of sales in Q2 Expect spending of 4 to 5% of sales in FY12 Working capital levels as expected Expect FY12 Free Cash Flow to Approximate Adj. Net Income ($ in Millions) Free Cash Flow is a non-GAAP measure; see Appendix for description. 71
Slide 13: Q2 Liquidity, Cash and Debt
Q2 Liquidity, Cash and Debt ($ in Millions) Dividends $0.18 per share paid in March $0.21 per share effective Q3, an increase of 17% Deutsch Funding - $2.05 billion Issued $750 million of long-term debt for acquisition and upcoming payoff of notes maturing in October Issued additional $390 million o
Slide 14: Q2 Orders Summary
Q2 Orders Summary (5 in minions) YY aia Segment Q2FY12 QIFY12_ Q2FY11 Change Change Transportation Solutions $ 1,488 $ 1,421 $ 1,415 5% 5% Book to Bill 1.02 1.01 1.08 Communications & Industrial Solutions 983 $ (915 1,188 (17)% 8% Book to Bill 1.01 0.94 1.07 Network Solutions Excl. Subsea Communicat
Slide 15: Q3 2012 Outlook
Q3 2012 Outlook* Q3 Outlook* Transportation Solutions up 14% sequentially Deutsch adds ~$190 million to sales Flat organically vs. Q2 Estimated auto production flat at ~21 million vehicles Network Solutions up ~9% sequentially Subsea Communications sales ~$120 million; equal to Q2 Carrier spending i
Slide 16: Full Year 2012 Outlook
Full Year 2012 Outlook* Growth vs 52 Week Prior Year: Full Year 2012 Outlook* * Assumes commodity and currency exchange rates as of April 25, 2012. Adjusted EPS and Organic Sales Growth are non-GAAP measures; see Appendix for description. Growth comparisons to prior year exclude the impact of an add
Slide 17: Q&A
Q&A =TE so) ions
Slide 18: Appendix
Appendix =TE ote ons
Slide 19: Non-GAAP Measures
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 Operations,” “
Slide 20: Non-GAAP Measures (cont.)
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 any (“Adju
Slide 21: Non-GAAP Measures (cont.)
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 items,
Slide 22: Net Sales Growth Reconciliation – Q2 vs. Q2
Net Sales Growth Reconciliation – Q2 12 vs. Q2 11 Translation (2) Acquisition Transportation Solutions (3) : Automotive 101 $ 8.5 % (18) $ - $ 83 $ 7.0 % 88 % Aerospace, Defense, and Marine 21 12.6 (4) - 17 10.4 12 Total 122 8.9 (22) - 100 7.4 100 % Communications and Industrial Solutions (3) : Indu
Slide 23: Net Sales Growth Reconciliation – Q2 vs. Q1
Net Sales Growth Reconciliation – Q2 12 vs. Q1 12 Translation (2) Transportation Solutions (3) : Automotive 63 $ 5.2 % (20) $ 43 $ 3.5 % 88 % Aerospace, Defense, and Marine 11 7.0 (2) 9 5.3 12 Total 74 5.3 (22) 52 3.7 100 % Communications and Industrial Solutions (3) : Industrial 8 3.0 (2) 6 1.9 33
Slide 24: Reconciliation of Non-GAAP Measures – Quarter Ended March 30, 2012
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 30, 2012 Acquisition Restructuring Related and Other Adjusted U.S. GAAP Charges Charges, Net (Non-GAAP) (1) Operating Income: Transportation Solutions 227 $ 4 $ 2 $ 233 $ Communications and Industria
Slide 25: Reconciliation of Non-GAAP Measures – Quarter Ended March 25, 2011
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 25, 2011 Acquisition Restructuring Related and Other Adjusted U.S. GAAP Charges (1) Charges, Net (Non-GAAP) (2) Operating Income: Transportation Solutions 211 $ - $ (6) $ 205 $ Communications and Ind
Slide 26: Reconciliation of Non-GAAP Measures – Quarter Ended June 24, 2011
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 24, 2011 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 211 $ - $ (13) $ - $ 198 $ Comm
Slide 27: Reconciliation of Non-GAAP Measures – Quarter Ended December 30, 2011
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 30, 2011 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges Charges, Net Items (1) (Non-GAAP) (2) Operating Income: Transportation Solutions 223 $ 4 $ (4) $ - $ 223 $ Commu
Slide 28: Reconciliation of Non-GAAP Measures – Year Ended September 30, 2011
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 30, 2011 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 848 $ - $ (14) $ - $ 834 $ Co
Slide 29: Gross Margin & Gross Margin Percentage Reconciliation
Gross Margin & Gross Margin Percentage Reconciliation September 26, September 25, September 24, September 30, December 30, March 30, 2008 2009 2010 2011 2011 2012 ($ in millions) Net sales 13,927 $ 9,926 $ 11,681 $ 13,778 $ 3,170 $ 3,249 $ Cost of sales 9,895 7,490 8,038 9,507 2,227 2,228 Gross marg
Slide 30: Reconciliation of Non-GAAP Measures – 52 Week Year Ended September 30, 2011
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the 52 Week Year Ended September 30, 2011 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) (Non-GAAP) (3) 53rd We