Investor Presentation Q1 2018

Transcription

1 Investor Presentation Q

2 Forward-looking statements Safe Harbor Statement This presentation contains forward-looking statements, which may concern our plans, objectives, outlook, goals, strategies, future events, future net sales or performance, capital expenditures, financing needs, future restructuring, plans or intentions relating to expansions, business trends and other information that is not historical information. All forward-looking statements are based upon information available to us on the date of this release and are subject to risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Risks that could cause such results to differ include: failure to capitalize on, and volatility within, the Company's growth drivers, including internet connectivity, clean energy, and safety and protection, as well as specific market and industry trends within these growth drivers; business, economic and political conditions in the United States and abroad, particularly in China, South Korea, Germany, Hungary and Belgium, where we maintain significant manufacturing, sales or administrative operations; fluctuations in foreign currency exchange rates; research and development efforts; competitive developments; business development transactions and related integration considerations; the outcome of ongoing and future litigation, including our asbestos-related product liability litigation; and changes in laws and regulations applicable to our business. For additional information about the risks, uncertainties and other factors that may affect our business, please see our most recent annual report on Form 10-K and any subsequent quarterly reports on Forms 10-Q filed with the Securities and Exchange Commission. Rogers Corporation assumes no responsibility to update any forward-looking statements contained herein except as required by law. Non-GAAP Information This presentation includes the following financial measures that are not presented in accordance with generally accepted accounting principles in the United States of America ( GAAP ): (1) Adjusted earnings per diluted share, which the Company defines as earnings per diluted share excluding acquisition-related amortization of intangible assets and discrete items, such as restructuring expenses, certain impairments, environmental accrual adjustments, acquisition and related integration costs, non-recurring tax changes, asbestos-related charges, and gains or losses on asset or business dispositions (collectively, Discrete Items ) (2) Adjusted operating income, which the Company defines as operating income excluding acquisition-related amortization of intangible assets and Discrete Items; (3) Adjusted operating margin, which the Company defines as operating margin excluding acquisition-related amortization of intangible assets and Discrete Items; (4) Adjusted EBITDA, which the company defines as net income excluding interest expense, income tax expense, depreciation and amortization, and Discrete Items; and (5) Adjusted EBITDA margin, which the Company defines as net income margin excluding interest expense, income tax expense, depreciation and amortization, and Discrete Items. Management believes each of these measures is useful to investors because they allow for comparison to the Company s performance in prior periods without the effect of items that, by their nature, tend to obscure the Company s core operating results due to the potential variability across periods based on the timing, frequency and magnitude. As a result, management believes that adjusted earnings per diluted share, adjusted EBITDA, adjusted operating income, adjusted operating margin and adjusted EBITDA margin enhance the ability of investors to analyze trends in the Company s business and evaluate the Company s performance relative to peer companies. However, non-gaap financial measures have limitations as analytical tools and should not be considered in isolation from, or solely as alternatives to, financial measures prepared in accordance with GAAP. In addition, these non-gaap financial measures may differ from similarly named measures used by other companies. Reconciliations of the differences between these non-gaap financial measures and their most directly comparable financial measures calculated in accordance with GAAP are set forth at the end of this document. Management also believes that providing net sales information on a constant currency or FX adjusted basis is useful to investors as it allows for the comparison of net sales for the current period to past periods without the impact of changes in exchange rates (from various local currencies into US dollars) which occurred during the intervening time. To calculate constant currency or FX adjusted revenues, we converted current period local currency revenues to US dollars at prior period rates, and used the resulting US dollar revenues to calculate growth vs. the prior period reported revenues. 2

3 Rogers at a glance Power Ticker Heritage NYSE ROG Established in 1832, >185 years of operations Protect 2017 Sales $821M Connect Employees Headquarters Global Scale 3,400 employees worldwide Chandler, AZ 12 manufacturing locations in 6 countries Global leader in engineered materials; well-positioned for continued value creation 3

4 Rogers business overview Key business metrics Full year 2017 $821M Sales Q1 18 $215M 18.5% Adjusted operating margin * Q % 3% 27% 3% 22% Q % 36% 34% 37% Regional sales ( Ship to ) Asia North America Europe Sales by business unit Advanced Connectivity Solutions Elastomeric Material Solutions Power Electronics Solutions Other 22% 29% % Portfolio highlights High-performance materials Mission-critical applications Technology innovation and leadership Strong, collaborative customer relationships Engineer-to-engineer sales Global sales, manufacturing and technology footprint Strong growth profile with margin expansion opportunities *See reconciliation of adjusted operating margin to operating margin in the appendix. 4

5 One Rogers approach Cultural behaviors driving results Live safely Trust Innovate Just decide Speak openly Simply improve Deliver results Performance-driven, ethical culture driving exceptional results 5

6 Focused strategy guiding the way Strategic intent Build and optimize businesses for profitable growth and scale through innovation and acquisitions leveraging our competencies For markets that demand performance, Rogers applies technical problem solving and engineering capabilities to identify, develop and deliver highlyengineered materials and solutions enabled by four pillars Market-driven organization Innovation leadership Synergistic M&A Operational excellence to deliver Top quartile operating profit growth Targeting top-tier performance 6

7 Strategic track record Sales Adjusted operating margin * Free cash flow ** $ % $112 $499 Significant sales growth 10.0% Substantial profitability improvement $17 Strong cash generation Growth through Innovation and synergistic M&A Greater market diversification Expanded customer base Significant margin expansion Strategic R&D investments Strong operating cash flow Disciplined capital allocation Investing in strategy and growth Executing the strategy to create shareholder value *See reconciliation in the appendix of adjusted operating margin to operating margin. **Free cash flow calculated by subtracting GAAP capital expenditures from GAAP net cash provided by operating activities from continuing operations, with calculation in the appendix. 7

8 Market-driven innovation Providing enabling solutions for: TODAY s Growth applications TOMORROW s Emerging market opportunities Advanced Mobility Advanced Connectivity HEV power modules EV batteries Vehicle electrification Advanced driver assistance systems A history of enabling innovation for today s and tomorrow s solutions 4G/LTE power amplifiers Multiband antennas Portable electronics Autonomous vehicles Vehicle-to-vehicle communications 5G wireless infrastructure Internet of Things (IoT) 8

9 Strong execution of synergistic M&A Top of the Pyramid criteria: Market and technology leadership Highly engineered applications Differentiated offerings Attractive financial profile Q Q Q Q Future transactions Continuing focus on differentiated growth businesses 9

10 Global capabilities North America E Europe E Asia Headquarters Chandler, AZ Manufacturing AZ, CA, CT, DE, IL, RI Innovation centers AZ, MA E Manufacturing Belgium, Germany, Hungary Manufacturing China, South Korea, Japan (JV) Innovation center China Manufacturing & partnering globally to deliver service, reliability & innovation 10

11 3 Strategic business segments Advanced Connectivity Solutions (ACS) Elastomeric Material Solutions (EMS) Power Electronics Solutions (PES) High performance materials Mission-critical applications Technology innovation leadership Strong, collaborative customer relationships Focused on unique, engineered materials solutions 11

12 ACS business overview Key business metrics Full year 2017 $301M Q1 18 $73.5M Sales 19.9% Q % Segment adjusted operating margin * Q1 18 Other ACS 12% Auto safety / connectivity 24% Consumer electronics 4% Vertical applications Aerospace & defense 20% Wireless infrastructure 40% Portfolio highlights Leader across market applications Expanded offering / solutions provider Trusted partner for innovation Strong customer loyalty / collaboration Strong position to support customers and markets worldwide *See reconciliation of segment adjusted operating margin to segment operating margin in the appendix. 12

13 ACS market applications Market application % of YTD Sales Competitive Advantages Auto safety / connectivity Wireless infrastructure Aerospace & defense 24% 40% 20% Portfolio supports short, mid and long range sensors Global leadership position in installed base Reliability is a cornerstone value Broad portfolio of high-frequency solutions Trust based on leadership position in 2G/3G/4G World-class technical expertise and problem solving Decades of high reliability excellence Unique products for the toughest applications Our consistent material performance is valued ACS Business Unit Operating from a position of strength in target markets Trusted to deliver innovation and reliability to markets that demand nothing less 13

14 EMS business overview Key business metrics Full year 2017 $313M Q1 18 $13.8M Sales 20.5% Q % Segment adjusted operating margin * Automotive 9% Q1 18 Consumer 6% Mass Transit 7% Other 8% Portable Electronics 25% Vertical applications General Industrial 45% Portfolio highlights Diversified portfolio across markets and applications New North American-based acquisitions offer the opportunity to leverage global footprint Strong customer loyalty Product performance is a critical customer criteria Diverse portfolio of applications across global markets providing many vectors for growth **See reconciliation of segment adjusted operating margin to segment operating margin in the appendix. 14

15 EMS market applications Market application % of YTD Sales Competitive Advantages General industrial 45% Technology leadership Strong customer loyalty in all regions Growing diversity of material portfolio Portable electronics 25% Market leadership with strong position across OEMs Well positioned for technology changes Changing OEM competitive landscape; new OEMs offering new opportunities Automotive 9% Sealing and isolation solutions Technology leadership Well-positioned in fast growing EV segment EMS Business Unit Strong market position in key segments Diversified market and product portfolio Global resources to drive growth in acquisitions Attractive mix of steady growth and high-potential applications 15

16 PES business overview Key business metrics Full year 2017 $185M Q1 18 $57.7M Sales 11.0% Q % Segment adjusted operating margin * Q1 18 Micro Channel Coolers 8% Mass Transit 9% Renewable Energy 17% Other 3% Vertical applications Industrial 28% e-mobility 36% Portfolio highlights Market leader in our product lines Well established global service network Experienced provider in automotive Strong customization design capability Engineer-to-engineer relationships Manufacturing in low-cost countries Strong track record of top- and bottom-line growth *See reconciliation of segment adjusted operating margin to segment operating margin in the appendix. 16

17 PES market applications Market application % of YTD Sales Competitive Advantages e-mobility EV/PHEV and Vehicle Electrification Industrial UPS, VFD & MCC 36% 36% Recognized technology leadership with OEMs and Tier 1 automotive customers Unsurpassed product quality and reliability Established, dependable supplier, 10+ years in market Market-leading position in DBC substrates Expertise in DBC, offering high-quality and reliability Leading position in advanced feature offerings Renewable energy 17% Market leader in DBC substrates for residential solar applications Expertise in laminated busbars for high power solar and wind farms PES Business Unit Broadening product offerings based on customer collaboration to reinforce and expand industry-leading position Strong commercial base with industrial market leadership; e-mobility is a major growth driver 17

18 Heritage of innovation Materials innovation is in our DNA 18

19 Top of the pyramid focus Rogers focus Market and technology leadership Highly engineered applications Differentiated offerings Attractive financial profile High performance differentiated solutions drive growth 19

20 Examples from new product pipeline Advanced Mobility New generation of power semiconductor substrates for wide bandgap semiconductors Low inductance integrated capacitor solutions for EV applications Advanced Connectivity Dielectric-based broadband antennas for 5G infrastructure Smaller, decorrelated antennas in handsets for high order MIMO Extreme low-loss, high-speed platform enabling 50 GB/s per channel Heat absorbing materials to reduce hotspots in portable electronics Pursuing a wide range of market-driven opportunities 20

21 Initiatives for operational excellence Footprint Optimizing utilization Process Improving productivity and yield 31.8% Actions for 38.8% target consistency 40% Cost structure Increasing flexibility and repurposing underutilized assets Back office Increase utilization of shared services Target Operational excellence drives continued margin expansion 21

22 Rogers vision for 2020 Strategic Elements Financial objectives Market-Driven Organization Synergistic M&A Innovation Leadership Operational Excellence Organic growth: 7-10% 2017: 13% $1.2B Revenues 15% Total growth Synergistic M&A growth: 5-8% 2017: 12% 20% Adjusted Operating Margin: 20% Adjusted operating margin Build and optimize businesses for profitable growth and scale through innovation and acquisitions 2017: 18.5% 22

23 Financial overview

24 Recent financial highlights Q ($ in millions, except EPS) Q Q Variance Net sales $214.6 $203.8 $10.8 Growth % 5.3% Operating income $31.0 $39.0 ($8.0) Operating margin % 14.5% 19.2% (469) Bps Adjusted operating income * $33.0 $44.8 ($11.8) Adjusted operating margin % * 15.4% 22.0% (660) Bps Net income $26.1 $27.0 ($0.9) Net income % of net sales 12.2% 13.3% (110) Bps Adjusted EBITDA * $41.4 $54.3 ($12.9) Adjusted EBITDA margin * 19.3% 26.6% (730) Bps EPS $1.40 $1.47 ($0.07) Adjusted EPS * $1.48 $1.68 ($0.20) Favorable tax rate offsets operational challenges *See reconciliations to adjusted metrics in the appendix: adjusted operating income to operating income, adjusted operating margin to operating margin, adjusted EBITDA to net income and adjusted earnings per diluted share to earnings per diluted share. 24

25 Q revenue bridge Highlights Revenues of $214.6 million ($ in millions) (1.2)% $ % 1.9% 5.3% $9.4 $3.9 Volume & other decline of 1.2% $203.8 $214.6 Currency impact of 4.6% Adoption of revenue recognition guidance impact of 1.9% Q Revenue Volume & Other* Currency Accounting change Q Revenue ADAS and e-mobility growth unable to offset lower 4G/LTE spending *Volume & Other of -$2.5 million represents growth excluding the impact of FX and updated revenue recognition. 25

26 Q adjusted operating income * bridge Highlights Adjusted operating margin* 15.4% versus 22.0% last year Performance challenges on capacity optimization, multi-site qualifications, downtime and copper costs Increases in SG&A and R&D inline with forecast to support future growth Volume & Other includes favorable FX and adoption of revenue recognition guidelines with partial offset from lower volume ($ in millions) +5.4% -17.6% $44.8 Q Adj. Op. Income* $2.4 $7.9 Volume & Other -11.4% $5.1 Lower adjusted operating margin* Operating challenges and higher SG&A and R&D expense -2.7% $1.2 $33.0 Performance SG&A R&D Q Adj. Op. Income* *See reconciliations in the appendix: adjusted operating income to operating income and adjusted operating margin to operating margin. 26

27 Q adjusted EPS * bridge Highlights Adjusted EPS* of $1.48 Decrease of 11.9% versus last year Favorable volume & other, primarily FX and revenue recognition Performance challenges on capacity optimization efforts, multi-site qualifications, downtime and copper costs SG&A and R&D increases inline with forecast to support future growth Tax rate 15.4% versus 32.3% $1.68 Q Adj. EPS* +5.4% -17.3% $0.09 Volume & Other $ % $ % $ % $0.04 Performance SG&A R&D Misc. income/ expense +15.5% -11.9% $0.26 Tax rate/share Dilution $1.48 Q Adj. EPS* Favorable tax rate partially offsets Q1 operating challenges and expenses *Reconciliation of adjusted earnings per diluted share to earnings per diluted share is included in the appendix. Note: adjusted EPS variances displayed net of tax expense. 27

28 Q segment results ($ in millions) Segment revenues Q1 18 Change % Adj. %* ACS (6.5)% (8.8%) EMS 1.6% (1.1%) PES 35.3% 12.8% Consolidated 5.3% (1.2%) Segment adjusted operating income* Segment adjusted operating margin* Q1 17 Q1 18 ACS 25.7% 13.1% EMS 22.2% 17.6% PES 13.2% 13.3% Consolidated 22.0% 15.4% $78.5 $73.5 $76.8 $78.1 $42.7 $57.7 $20.2 $9.6 $17.1 $13.8 $5.6 $7.7 ACS EMS PES Strong PES revenue growth Revenue mix and operating challenges ACS EMS PES *See reconciliations of adjusted operating income, adjusted operating margin, and reported versus adjusted growth by segment in the appendix. Other segment sales and Other segment margin are excluded from the tables above. 28

29 Q cash utilization ($ in millions) Net cash provided by operating activities $8.8M Net cash used in investing activities ($9.1M) Net cash used in financing activities ($8.5M) Effect of FX $0.8M Net increase (decrease) in cash ($8.1M) $40.6 $30.1 $9.1 $5.6 $3.0 $1.2 $0.1 $0.4 Working capital ($30.1M): $181.2 A/R ($8M) $173.0 Inventory Incentive comp paid A/P and other accrued ($9M) ($17M) $4M 12/31/2017 Cash Adj. EBITDA*+ Working* capital Capex Cash taxes paid Share repurchase Interest, net Debt^ Other 3/31/2018 Strong balance sheet funds strategic priorities +On this slide, adjusted EBITDA* adjusted for adoption of the revenue recognition standard by ($0.9M) of net income. *See reconciliation of adjusted EBITDA to net income, and additional detail on working capital calculation in the appendix. ^Debt represents repayment of long-term lease obligations of $0.1 million. 29

30 Capital allocation priorities Execute strategic priorities Strong balance sheet and cash generation Invest in business and pursue synergistic M&A New product innovations and operational excellence Ensure adequate liquidity Optimize capital structure Distribute excess cash Maintain sufficient cash balance Continue to ensure adequate capital resources Target sustainable capital structure Sustain strategy execution over time Excess cash to be distributed through execution of share repurchase program Focus on value enhancing investments 30

31 Capital allocation Historical deployment * Debt repayment ~50% Capital expenditures ~24% Capital spending Synergistic M&A Revenue growth Footprint optimization Process improvements Enhance growth platform Increase market leadership Deliver more significant value Net acquisitions ** ~15% Share repurchases ~11% Share repurchases Return cash to shareholders Increase EPS Reward investors Capital allocation flexibility remains focused on long-term shareholder value creation *Historical capital deployment of operating cash flow from **Gross cash outflow for acquisitions from of $353M. 31

32 2018 capital spending outlook Key points Capex by category Capex as a % of sales Capital spending outlook higher than historical spend Strategic and growth investments driving spending higher Includes operational excellence and automation capex Increasing capacity for anticipated strong growth in 5G wireless, auto radar, and EV/HEV 2018 outlook Maintenance capex 14% Other / IT 10% Strategic and growth investment 76% 7.0% 6.0% 5.0% 4.0% 3.0% 4.8% 3.1% 4.7% 3.9% 2.8% 6.3% 3.3% 2.0% ^ Outlook calls for 2018 capital spending of $50-$60 million 2018^ capex as a % of sales represents the midpoint of the $50-$60M outlook over 2018 consensus revenues of ~$880M. 32

33 Rogers outperforms Track record Track record of strong financial performance Growth Accelerating growth through innovations and acquisitions Cost structure Continuing to optimize cost structure while investing for growth Flexibility Capital allocation Significant operational and financial flexibility Strong cash generation and accretive deployment plan Focus on delivering long-term value 33

34 Appendix

35 Q and Q adjusted operating income and operating margin reconciliation* Q1-18($) Q1-18(%) Q1-17($) Q1-17(%) Operating income and operating margin $ % $ % Restructuring, severance, impairment and other related costs $ % $ % Acquisition/ divestiture related costs - - $ % Integration costs $ % - - Gain from legal settlement ($3.6) (1.7%) - - Purchase accounting inventory adjustment - - $ % Gain / Loss on sale of non-core assets - - ($0.9) (0.4%) Operating income and operating margin plus Discrete Items $ % $ % Acquisition intangible amortization $ % $ % Adjusted operating income and operating margin $ % $ % Note: percentages and dollars may not add due to rounding. 35

36 2017 and 2012 adjusted operating margin & 2017 operating income reconciliations FY-17 FY-17 $ FY-12 Operating margin & operating income 15.9% $ % Environmental accrual adjustment Pension curtailment & settlement charges % Restructuring, severance, impairment and other related costs 0.4% $ % Manufacturing site optimization % Purchase accounting inventory adjustment 0.2% $1.6 - Asbestos related charge 0.4% $ % Gain on sale of non-core assets (0.6%) ($5.3) - Acquisition/ divestiture related costs 0.1% $0.6 - Integration costs 0.3% $2.6 - Relocation charges Curamik s final inspection operation Impairment charge on investment Other special charges % Operating margin & operating income plus Discrete Items 16.7% $ % Acquisition intangible amortization 1.8% $ % Adjusted operating margin & operating income 18.5% $ % Note: percentages and dollars may not add due to rounding. 36

37 Free cash flow reconciliations ($ in millions) FY-17 FY-16 FY-15 FY-14 FY-13 FY-12 Operating cash flow from continuing operations $139.0 $117.0 $73.9 $85.2 $77.2 $40.4 Less capital expenditures $27.2 $18.1 $24.8 $28.8 $16.9 $23.8 Free cash flow $111.8 $98.9 $49.1 $56.4 $60.3 $16.6 Note: percentages and dollars may not add due to rounding. 37

38 Q Adjusted EBITDA and adjusted EBITDA margin reconciliation* ($ in millions) Q1-18 ($) Q1-18 (%) Q1-17 ($) Q1-17 (%) Net Income $ % $ % Interest, net $ % $ % Income tax expense (benefit) $ % $ % Depreciation $ % $ % Intangible amortization $ % $ % Restructuring, severance, impairment and other related charges $ % $ % Acquisition related costs - - $ % Integration Costs $ % - - Gain on sale of non-core assets - - ($0.9) (0.4%) Gain on legal settlement ($3.6) (1.7%) - - Purchase accounting inventory adjustment - - $ % Adjusted EBITDA $ % $ % +Adjusted EBITDA*+ on the cash utilization slide is adjusted lower by $0.9M from $41.4M to $40.6M. Note: percentages and dollars may not add due to rounding. 38

39 Q adjusted EPS reconciliations Q1-18 ($) Q1-17 ($) Earnings per diluted share $1.40 $1.47 Restructuring, severance, impairment and other related costs $0.06 $0.03 Acquisition and related integration costs $0.02 $0.04 Purchase accounting inventory adjustment - $0.05 Gain on legal settlement ($0.15) - Loss (gain) on sale of assets - ($0.03) Total Discrete Items ($0.07) $0.09 Earnings per diluted share, adjusted for Discrete Items $1.33 $1.56 Acquisition intangible amortization $0.15 $0.12 Adjusted earnings per diluted share $1.48 $1.68 Note: percentages and dollars may not add due to rounding. 39

40 FY-2017 ACS Segment adjusted operating income and operating margin reconciliations ($ in millions) FY-17 ($) FY-17 (%) Operating income and margin $ % Asbestos related charge $ % Gain on sale of non-core assets ($2.5) (0.8%) Restructuring, severance, impairment and other related costs $ % Operating margin plus Discrete Items $ % Acquisition intangible amortization $ % Adjusted operating income and margin $ % Note: percentages and dollars may not add due to rounding. 40

41 Q ACS Segment adjusted operating income and operating margin reconciliations ($ in millions) Q1-18 ($) Q1-18 (%) Q1-17 ($) Q1-17 (%) Operating income and margin $ % $ % Gain on sale of non-core assets - - ($0.4) (0.5%) Restructuring, severance, impairment and other related costs $ % $ % Operating margin plus Discrete Items $ % $ % Acquisition intangible amortization $ % $ % Adjusted operating income and margin $ % $ % Note: percentages and dollars may not add due to rounding. 41

42 FY-2017 EMS Segment adjusted operating income and operating margin reconciliations ($ in millions) FY-17 ($) FY-17 (%) Operating income and margin $ % Asbestos related charge $ % Restructuring, severance, impairment and other related costs $ % Purchase accounting inventory adjustment $ % Acquisition related costs $ % Gain on sale of non-core assets ($1.6) (0.5%) Operating margin plus Discrete Items $ % Acquisition intangible amortization $ % Adjusted operating income and margin $ % Note: percentages and dollars may not add due to rounding. 42

43 Q EMS Segment adjusted operating income and operating margin reconciliations ($ in millions) Q1-18 ($) Q1-18 (%) Q1-17 ($) Q1-17 (%) Operating income and margin $ % $ % Gain on legal settlement ($3.6) (4.6%) - - Restructuring, severance, impairment and other related costs $ % $ % Purchase accounting inventory adjustment - - $ % Acquisition related costs - - $ % Integration costs $ % - - Gain on sale of non-core assets - - ($0.3) (0.4%) Operating margin plus Discrete Items $ % $ % Acquisition intangible amortization $ % $ % Adjusted operating income and margin $ % $ % Note: percentages and dollars may not add due to rounding. 43

44 FY-2017 PES Segment adjusted operating income and operating margin reconciliations ($ in millions) FY-17 ($) FY-17 (%) Operating income and margin $ % Asbestos related charge $ % Restructuring, severance, impairment and other related costs $ % Gain on sale of non-core assets ($1.2) (0.6%) Operating margin plus Discrete Items $ % Acquisition intangible amortization $ % Adjusted operating income and margin $ % Note: percentages and dollars may not add due to rounding. 44

45 Q PES Segment adjusted operating income and operating margin reconciliations ($ in millions) Q1-18 ($) Q1-18 (%) Q1-17 ($) Q1-17 (%) Operating income and margin $ % $ % Restructuring, severance, impairment and other related costs $ % $ % Gain on sale of non-core assets - - ($0.2) (0.5%) Operating margin plus Discrete Items $ % $ % Acquisition intangible amortization $ % $ % Adjusted operating income and margin $ % $ % Note: percentages and dollars may not add due to rounding. 45

46 Q reported and adjusted net sales and growth ($ in millions) Foreign Revenue Net sales adjusted for Reported net sales exchange (FX) recognition FX and revenue recognition 1Q17 1Q18 % impact impact 1Q18 $ $ Change $ % $ % $ % ACS % % % % EMS % % % % PES % % % % Note: percentages and dollars may not add due to rounding. 46

47 Q working capital: changes in operating assets and liabilities used in working capital calculation ($ in millions) Reported Working Revenue Working Capital recognition Capital Calculation impact Adjusted $ $ $ Accounts receivable Contract assets Inventories *Accounts payable and other accrued expenses Total *Accounts payable and other accrued expenses of includes: 1) Incentive compensation paid ) Accounts payable and other accrued 4.0 Note: percentages and dollars may not add due to rounding. 47