1 st Quarter FY 2013 Conference Call

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Beverly Hardy
5 years ago
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1 Insert pictures into these angled boxes. Height should be 3.44 inches. 1 st Quarter FY 2013 Conference Call January 18, 2013 Proprietary Information

2 Safe Harbor Statement This presentation contains statements, including certain projections and business trends, that are forward-looking statements as defined in the Private Securities Litigation Reform Act of Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the financial condition of our customers, including bankruptcies; the health of the global economy, including potential deterioration in economic and financial market conditions; the rate of recovery of the commercial OEM production rates and the aftermarket; the impacts of natural disasters, including operational disruption, potential supply shortages and other economic impacts; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; delays related to the award of domestic and international contracts; unanticipated impacts of sequestration and other provisions of the Budget Control Act of 2011 that are set to be implemented in March 2013; the discontinuance of support for military transformation and modernization programs; potential adverse impact of oil prices on the commercial aerospace industry; the impact of terrorist events on the commercial aerospace industry; declining defense budgets resulting from budget deficits in the U.S. and abroad; changes in domestic and foreign government spending, budgetary, procurement and trade policies adverse to our businesses; market acceptance of our new and existing technologies, products and services; reliability of and customer satisfaction with our products and services; favorable outcomes on or potential cancellation or restructuring of contracts, orders or program priorities by our customers; timing of international contract awards; recruitment and retention of qualified personnel; regulatory restrictions on air travel due to environmental concerns; effective negotiation of collective bargaining agreements by us and our customers, including our collective bargaining agreements set to expire in May 2013; performance of our customers and subcontractors; risks inherent in development and fixed-price contracts, particularly the risk of cost overruns; risk of significant reduction to air travel or aircraft capacity beyond our forecasts; our ability to execute to our internal performance plans such as our productivity and quality improvements and cost reduction initiatives; achievement of our acquisition and related integration plans; continuing to maintain our planned effective tax rates; our ability to develop contract compliant systems and products on schedule and within anticipated cost estimates; risk of fines and penalties related to noncompliance with laws and regulations including export control and environmental regulations; risk of asset impairments; our ability to win new business and convert those orders to sales within the fiscal year in accordance with our annual operating plan; and the uncertainties of the outcome of lawsuits, claims and legal proceedings, as well as other risks and uncertainties, including but not limited to those detailed herein and from time to time in our Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof and the company assumes no obligation to update any forward-looking statement. Proprietary Information 2

3 1st Quarter FY 2013 Results ($ in millions except EPS amounts) Sales Net Income $1,094 $1,062 3% decline $130 $132 2% increase EPS Operating Cash Flow $0.86 $0.94 $63 9% increase ($64) Proprietary Information 3

4 Commercial Systems ($ in millions) Sales $511 $516 1% increase $17 million OEM growth (6%) Increased production rates for Bombardier Globals & Boeing 787 Increased deliveries for Airbus A330 Fewer deliveries for light-end business jets $14 million Aftermarket decline (6%) Lower sales of spares Operating Earnings $101 $106 $5 million Increase in Operating Earnings Lower company-funded R&D 5% increase Operating Margins 19.8% 20.5% Proprietary Information 4

5 Government Systems ($ in millions) $583 Sales 6% decline $546 Sales decline $37 million (6%) Lower development revenue as programs complete or transition to production Lower sales of DAGR GPS products Increased tanker aircraft avionics, ground network radios and international targeting systems Sales by product category: Avionics decrease 3% Communication Products decline 8% Surface Solutions decrease 17% Navigation Products decline 13% Operating Earnings $117 9% decline $107 $10 million decrease in operating earnings (9%) Lower sales Lower company-funded R&D from completion of GPS and communication products development programs Operating Margins 20.1% 19.6% Proprietary Information 5

6 Capital Structure Status ($ in millions) 09/30/12 12/31/12 Cash $ 335 $ 337 Short-term Debt - (549) Long-term Debt (779) (573) Net (Debt) / Cash $ (444) $ (785) Equity $ 1,264 $ 1,057 Debt To Total Capital 38% 51% Debt To EBITDA (1) 0.7x 1.1x (1) See slide 11 for non-gaap disclosures Proprietary Information 6

7 R & D Investment Research and Development ($ in millions) $234 $ Maintained R&D investment as % of sales Increased pre-production R&D investment for Boeing 737 Max, Bombardier CSeries and Global 7000/8000 programs Full year forecast remains at approximately $1 billion in total R&D investment % of Sales 21.4% 21.4% Increase in Pre-production Engineering, Net Customer Funded R&D Company Funded R&D Proprietary Information 7

8 Status of Share Repurchases ($ in millions) Common Shares Outstanding % decrease million shares repurchased in fiscal year 2013 first quarter Cost of Purchases - $333 Million Average Cost per Share - $ million shares repurchased since January 2002 Cost of Purchases - $4 Billion $147 million authorization remaining Proprietary Information 8

9 FY 2013 Guidance Total Sales $4.6B to $4.7B Total Segment Operating Margin 21% to 22% Earnings Per Share $4.45 to $4.65 Cash Provided by Operating Activities $500M to $600M Research & Development Investment ~$1B Capital Expenditure ~$140M Proprietary Information 9

10 Proprietary Information 10

11 Non-GAAP Financial Information The non-gaap ratio of debt to EBITDA information included on slide six is believed to be useful to investors understanding and assessment of the Company s total capital structure and liquidity. The Company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. The table below explains the debt to EBITDA calculation in more detail for the twelve-month period from October 1, 2011 through September 30, 2012 and the twelve-month period from January 1, 2012 through December 31, 2012 (unaudited, in millions): 12 months ended 9/30/12 12/31/12 Income before income taxes $857 $851 Interest expense Depreciation Amortization of intangible assets and pre-production engineering costs Earnings before interest, taxes, depreciation and amortization (EBITDA) $1,058 $1,055 9/30/12 12/31/12 Total debt $779 $1,122 Debt to EBITDA 0.7x 1.1x Proprietary Information 11

3 rd Quarter FY 2015 Conference Call

Insert pictures into these angled boxes. Height should be 3.44 inches. 3 rd Quarter FY 2015 Conference Call July 24, 2015 Safe Harbor Statement This presentation contains statements, including certain