Steve Martens VP Investor Relations FY13 Q3

Transcription

1 Steve Martens VP Investor Relations FY13 Q3

2 Forward-Looking Statement Statements in this presentation that are not historical are forward-looking and are subject to various risks and uncertainties that could cause actual results to vary materially from those stated. Words such as expect, anticipate, outlook, forecast, could, project, intend, plan, continue, believe, seek, estimate, should, may, assume, potential, variations of such words and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based on currently available information and include, among others, the discussion under Outlook. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Respective risks, uncertainties, and assumptions that could affect the outcome or results of operations are described in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2012, and the Form 10-Q for the quarter ended December 31, Forward-looking statements are based upon beliefs, assumptions and information available at the time the statements are made. Actual outcomes and results may differ materially from what is expressed, implied, or forecast in these forward-looking statements. Reference may be made to forward-looking statements regarding growth strategies, industry trends, global economic conditions, success of customers, cost of raw materials, value of inventory, availability of credit, currency exchange rates, labor costs, protection of intellectual property, cost reduction initiatives, unauthorized activities in Japan, acquisition synergies, manufacturing strategies, product development introduction and sales, regulatory changes, competitive strengths, natural disasters, investigations and legal proceedings. Except as required under the federal securities laws, Molex does not have any intention or obligation to update publicly any forward-looking statements after the distribution of this presentation, whether as a result of new information, future events, changes in assumptions, or otherwise. 2

3 Molex > Outgrowing a Growth Market Positioned in large market A growing market Outperforming the market $50B 2012 global connector market 5-7% CAGR past 20 years 1.5X market growth 3

4 AGENDA Repositioned. Outgrowing a Growth Market. A repositioned business Leveraging key strengths Growth drivers going forward 4

5 Molex at a Glance Revenue $3.5B Employees 34, locations in 15 countries Products in portfolio >100,000 Market capitalization >$4.8B Dividend yield ~3-4% 5 Note: Fiscal year ends June 30th 2

6 Completed Transformation > One Global Platform Built global company Implemented global product-focused restructuring Efficient, profitable growth platform 6

7 Major Initiatives that Transformed Molex 1 Restructured globally 2 Improved cost structure Shifted to global product focus Three product-focused divisions, one worldwide sales & marketing organization SAP ERP Pay for performance Closed 14 facilities: $250M annual savings 70% of labor in low cost countries Lowered ongoing capex from 14% to 7% Reduced SG&A from 24% to under 19% Repositioned globally for improved performance 3 Accelerated top line growth Focus account program to penetrate high growth markets Highest R&D in industry at 5%-6% to drive innovation Price optimization program 7

8 Successful Results of Our Strategy Revenue GROWING Double digit EPS GROWING Double digit Capex STABLE 6-7% ongoing Free cash flow GROWING Free cash flow = net income Dividends SECURE Payout ratio 40-50% Balance sheet STRONG Liquidity of >$750M RONA IMPROVING From 20% to 25% 8

9 AGENDA Repositioned. Outgrowing a Growth Market. A repositioned business Leveraging key strengths Growth drivers going forward 9

10 Leveraging Key Strengths 1 Positioned in attractive, growth market 2 Diversified by customer and geography 3 Well-positioned product portfolio 4 Innovation leader 5 Solid financial resources 10

11 STRENGTH #1: ATTRACTIVE MARKET Positioned in Growing Connector Market A Growth Market (1) Top 3 Player in Fragmented Industry $66B $34B $45B >2,000 companies $8B $16B ~8% Molex E Consolidation opportunities 11 Note 1: Global Connector Market (Bishop Associates)

12 STRENGTH #1: ATTRACTIVE MARKET Long Growth Runway for Connector Industry Key Drivers Emerging markets Enterprise refresh cycle Auto / medical content Rising internet traffic More mobile devices 12

13 STRENGTH #2: DIVERSIFIED REVENUE Diversified Revenue by Market and Geography Market Breakdown (F2012) Geographic Breakdown (F2012) Medical / Military 3% Industrial 13% Europe 14% Automotive 17% Telecom 23% Americas 26% Consumer Electronics 18% Infotech 26% Asia 60% Well balanced by market Significant exposure to high growth Asia 13

14 STRENGTH #3: WELL- POSITIONED PORTFOLIO Products Align with Key Trends Mobile Devices Micro miniature products, flat flex and micro cable, sockets, antennae, switches, RF Internet Infrastructure / Enterprise Refresh Increasing Content in Auto / Medical High speed solutions (fiber optics, backplane, mezzanine, AOC, BTB), fiber optic and high performance cable assemblies, memory module connector and socket, CPU socket, RF, power products Connectors for harsh environments, infotainment modules and cables, micro-miniature connectors and cables, sensors, RF Emerging Markets Large product portfolio, global reach, industry leader 14

15 STRENGTH #4: INNOVATION LEADER Industry Leader in R&D Investment in R&D as % of revenue 5% Patents awarded in F New products last 3 years as % of FY2012 revenues 35% Current product pipeline vs. past Strongest 15

16 STRENGTH #5: SOLID FINANCIAL RESOURCES Powerful Cash Flow Generation Strong Free Cash Flow (1) ($M) $347M Financial Resources $401M net cash o Cash $652M o Debt $251M $204M Five year credit facility of $350M Liquidity of ~$750M F2011 F Note 1: Free Cash Flow is calculated as cash flow from operations minus capital expenditures

17 STRENGTH #5: SOLID FINANCIAL RESOURCES Record of Consistent Dividend Growth $0.82 $0.88 $0.70 $0.61 $0.61 $0.45 $0.15 $0.23 $0.30 F2005 F2006 F2007 F2008 F2009 F2010 F2011 F2012 Current Rate Target of 40% to 50% payout ratio 17

18 AGENDA Repositioned. Outgrowing a Growth Market. A repositioned business Leveraging key strengths Growth drivers going forward 18

19 1. Customers > Continuing Success Focus Accounts Fully penetrate customer base o 100,000+ product portfolio Percent of Total Revenue from Focus Accounts 32% Identify opportunities with fast growing, more profitable customers o Success with Focus Account program in % o Doubled exposure to FA customers from 16% of revenue to 32% o Reconfigured and expanded program in F2013 F2008 F2011 Opportunities in new markets and geographies 19

20 2. Drive Growth Through New Products New Product Introductions Long history of organic growth Recognized by major customers New products driving above market growth in F2013 F2009 F2010 F2011 F2012 Leveraging industry-leading R&D 20

21 2.1 Focus Markets Continue to diversify end market exposure Focus on markets with long product cycle, high margin and best growth potential o o o Medical Industrial Military Dedicate and acquire resources to build momentum 21

22 3. Growth from Adjacent Products Adjacent Products as % of Revenue Today Products High speed / interconnect Connectors with embedded components ~20% Antennae LED lighting Acoustics Will add $150-$200M incremental revenue in FY13 22

23 3.1 Adjacent Products > The Opportunity 1 Existing customer base looking for support 2 Low incremental investment, high RONA 3 Focus on smart phone / tablets initially 4 Opportunities in Automotive and Infotech 23

24 4. Greater Focus on Acquisitions Acquisition Focus Specific technologies or markets High margin product line o Fiber optics o RF Select markets, longer product lifecycle o Medical o Military o Industrial o Automotive Vertically integrate o Specialty wire and cable Target purchase price $30 - $300 million 24

25 5. Continue Cost and Productivity Improvements 1. Pricing Initiative Implemented software to drive analytics Price erosion now below long-term range 2. Lean Six Sigma Five year program to reduce waste and inefficiency Reduce costs, capex and working capital Executed projects worth $100m in F2012 Improve customer service 3. Supply Chain Initiative Leverage global purchasing volume Logistics efficiencies Implement better demand planning Expand margins and improve customer satisfaction 25

26 SUMMARY Repositioned. Outgrowing a Growth Market Positioning Repositioned: Built stronger platform for growth Efficient, global structure, product focused, lower cost, faster top line growth Strengths Leveraging key strengths Well-positioned in growth market, gaining share, excellent financial resources Growth Multiple initiatives driving growth New customers, products and markets, adjacent products and acquisitions 26

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28 Full Year Financial Summary (US $ in millions, except per-share data) Net revenue $3,007 $3,587 $3,489 Gross margin 29.7% 30.3% 30.6% Operating margin *9.4% 12.0% 11.4% EPS *$1.10 $1.70 $1.59 Strong operating margin versus S&P *See GAAP to Non-GAAP reconciliation

29 Free Cash Flow Trend Free Cash Flow Net Income Q2 12 Q3 12 Q4 12 Q1 13 Q2 123 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Cash Flow From Operations $141.0 $138.9 $143.3 $167.4 $87.2 Less: Capital Expenditures $52.3 $54.4 $77.7 $69.4 $78.6 Free Cash Flow (non-gaap measure) $88.7 $84.5 $65.6 $98.0 $8.6 US $ in millions 29

30 FY12 Cost of Sales Breakdown Variable Overhead 17% Direct Labor 11% Other Material 33% Depreciation 9% Fixed Overhead 16% 30 Gold 7% Plastic Resins 4% Copper 3%

31 New Structure is Reducing CapEx Avoid duplication of capacity Improve design standardization Internal tooling capability Japan, China Target: 6-7% of revenue 15.9% 9.7% 9.1% 6.8% 6.9% 7.6% 7.3% 6.5% Product Specific 50% of capex General Capacity 30% of capex General / Building 20% of capex 31

32 Average Seasonal Trend Sequential 10 year average Revenue Bookings Q3 (March) (2) to (3)% 1 to 2% Q4 (June) 5 to 6% 4 to 5% Q1 (September) 2 to 3% 4 to 5% Q2 (December) 1 to 2% (2) to (3)% 32

33 Low Cost Manufacturing Footprint 75% 70% 65% 55% 45% 47% 57% 35% 30% 25% FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 People Mfg. Sq. Ft. 33

34 Manufacturing Footprint by Geography Manufacturing Sq Footage FY07 FY12 Total square footage 7.2M 8.3M Asia 3.7M 5.3M Americas 2.2M 2.3M Europe 1.3M 0.7M Number of locations Fewer, but larger, fully-integrated facilities 34

35 Non-GAAP Financial Measures In Molex Incorporated s ( Molex or the Company ) conference call on August 8, 2012 regarding the Company s financial results for the fiscal quarter and fiscal year ended June 30, 2012 and the following slides, Molex may refer to non-gaap financial measures to describe earnings for such periods excluding the items referenced in the relevant slides used during this conference call. This is in addition to disclosing the most directly comparable measure for such periods determined in accordance with generally accepted accounting principles, or GAAP. Molex believes that these non-gaap financial measures provide useful information to investors because they provide information about the estimated financial performance of Molex s ongoing business and provide for greater transparency of supplemental information used by management in its financial and operational decision-making. These non-gaap financial measures may be different from non-gaap financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the relevant slides reconciling the non-gaap financial measures intended to be used in the conference call to the most comparable GAAP measure.

36 Non-GAAP Measure Fiscal year ended June 2010 Earnings per share $0.44 Restructuring costs and asset impairments 0.53 Unauthorized activities in Japan 0.10 Tax adjustment stock compensation 0.03 Non-GAAP earnings per share $1.10 Non-GAAP earnings per share is a non-gaap financial measure. We refer to non-gaap earnings per share to describe earnings per share excluding the items referenced above. We believe that non-gaap earnings per share provides useful information to investors because it provides information about the estimated financial performance of Molex s ongoing business. Non-GAAP earnings per share is used by management in its financial and operational decision-making and evaluation of overall operating performance and segment level core operating performance. Non-GAAP earnings per share may be different from similar measures used by other companies.

37 Non-GAAP Measure (US $ in thousands) Fiscal year ended June 2010 Income from operations $137,802 Restructuring costs and asset impairments 117,139 Unauthorized activities in Japan 26,898 Non-GAAP income from operations $281,839 Non-GAAP income from operations as a percent of sales 9.4% Non-GAAP income from operations is a non-gaap financial measure. We refer to non-gaap income from operations to describe income from operations excluding the items referenced above. We believe that non-gaap income from operations provides useful information to investors because it provides information about the estimated financial performance of Molex s ongoing business. Non-GAAP income from operations is used by management in its financial and operational decision-making and evaluation of overall operating performance and segment level core operating performance. Non-GAAP income from operations may be different from similar measures used by other companies.