igniting earnings power · 2017. 6. 12. · cec. corporate investments. share repurchase. interest...

The image part with relationship ID rId3 was not found in the file.

Chris CollierChief Financial Officer

Igniting Earnings Power

Uniquely Positioned

+

RevenueGrowth

Operating Profit Expansion

EPSGrowth

Strong Cash Flow Generation

Solid Capital Structure

Financial Principles

New Industries

Portfolio Evolution

Sketch-to-ScaleTM

2

Portfolio Evolution to Higher Margin Business

6.67.1

8.08.6

9.1

FY13 FY14 FY15 FY16 FY17

23.6

26.1 26.124.4 23.9


Revenue($B)

HRS + IEI Revenue($B)

Meaningful EvolutionTop-Line Doesn’t Tell the Story

FY13HRS12%

IEI16%

CTG30%

CEC42%

28%

FY17HRS17%

IEI21%

CTG27%

CEC35%

38%

Financial Performance Underscores Successful Evolution

611665

751792

815


Sustainable

0.84 0.89

1.14 1.17


1.0

Profitable

Adjusted EPS($)

Resilient

Free Cash Flow Generated($M)

Consistent

Shares Repurchased($M)

680701

554

639660


322

475

416 420

350


8% CAGR 9% CAGR $3.2B FCF generated $2.0B repurchased

Adjusted Operating Profit($M)

(FY13 – 17) (FY13 – 17)(FY13 – 17)(FY13 –17)

Innovation and R&D Investments($M)

121

93

49

39

39

FY17

FY16

FY15

FY14

FY13

2014

ElementumSilicon Valley

Innovation CenterCenters of Excellence

Innovation Centers Expansion Digital Health

2017• • • • •

Sketch-to-Scale

•Innovation labs

•

Investing in Capabilities Built for the Future

Strong Sustainable Free Cash Flow

680 701

554639 660


Free Cash Flow($M)

$3.2Bfor FY13 to FY17

Key Cash Flow Drivers» Earnings expansion» Working capital sustained at 6-8% of sales» Disciplined Capex investment modestly above

depreciation levels

~90%Free Cash Flow

Conversion

$3.5B+Operating Cash Flow

$2B+Free

Cash Flow

Cash Flow Generation Targets FY18–FY20

1 Reflects M&A transactions completed from FY13 to FY17 (excludes certain OEM asset acquisitions)

Targeted M&A Accelerates Our Portfolio Evolution

11<$25M

Target capabilities

Strategic customers

Longer product lifecycles

EPS accretive

Barriers to entry

Higher margins

Key Selection Criteria

# of Acquisitions (FY13–FY17) Based on purchase price 1

4>$100M

% of M&A Spend By Business Group1

61%

HRS 24%

IEI

15%

CTG~$1.5B

M&A

Expanding longer product lifecycle businesses and Sketch-to-Scale capabilities

2$25-$100M

503 500

700

107

500600

CY17 CY18 CY19 CY20 CY21 CY22 CY23 CY24 CY25

53

Balanced Capital Structure

Investment Grade RatedMoody’s | S&P | Fitch

Term Loans -- -- LIBOR +

137.5 bpsEURIBOR +100 bps

LIBOR + 137.5 bps

EURIBOR+69 bps -- -- --

Notes -- -- -- 4.625% -- -- 5% -- 4.75%

Significant Debt Maturities ($M) (Calendar Year)

~3.5%Low Avg.

Cost of Debt

$3.3BSolid Liquidity

($1.5B revolver + $1.8B cash)

2.4xStrong Debt/ Adj. EBITDA

(LTM)

Unwavering Shareholder Return Commitment

% of Free Cash Flow Returned to Shareholders

70%

64%

53%1–yr

3–yr

7–yr

813 757

684 639

591 563 545 531

400

510

322

475 416 420

350

FY11 FY12 FY13 FY14 FY15 FY16 FY17

shares outstanding (millions)

Share Repurchase($M)

Committed to returning over 50% of annual free cash flow to shareholders

Since FY11, we have repurchased…

~35%of shares

outstanding

~$2.9Bin stock

~360Mshares

Delivering Through our Disciplined Evolution

$4.5BHRS + IEI

revenue

$9.1BHRS + IEI

revenue

Driving predicable earnings and margin expansion

FY10HRS6%

IEI13%

CTG42%

CEC39%

19% FY17

HRS17%

IEI21%

CTG27%

CEC35%

38% FY20EHRS

~22%

IEI~23%

CTG~28%

CEC~27%

~45%

~$13.0BHRS + IEI

revenue

~2years

~4 years

~6 years

Est Avg Product Life Cycle

Structured to Deliver Profitable Growth

Annual RevenueGrowth Target Comments

10%+ » Technical offering and leadership expertise enables growth» Leveraging innovation and sketch-to-scale capabilities

10%+ » Momentum from record bookings across its broad portfolio» Positioned to penetrate massive TAM

3% to 5% » Structurally enhancing margin and earnings growth» Transformational new partnerships and new markets

-5% to 0% » Well positioned for next generation technologies» Disciplined management of legacy business

HRS

IEI

CTG

CEC

Targeted 2020 revenue growth model

FY17 Adjusted Operating

Target Adjusted Operating Margin

Profit($M)

Margin Range

$334 8.1% 6–9%

$180 3.6% 4–6%

$180 2.8% 2–4%

$229 2.7% 2.5–3.5%Corporateservices and other1

($108)

$815 3.4%

Positioned for Operating Profit and Margin Expansion

HRSIEI

CTGCEC

1 Corporate services and other primarily includes corporate services costs that are not included in the assessment of the performance of each of the identified business group

Targeted Adjusted Operating Profit Mix

Targeted 2020 delivers profit growth

FY20E

HRS

IEI

CTG

CEC

~60%

Transformational Nike Partnership

Meaningful RevenueInvestment losses

Top 10 CustomerCTG+ margins

$2 Billion+ HRS+ margins

Massive TAM expansion | Decade-long partnership | Modernizing the footwear industry

Invest and Create Rapid Ramp Industry Expansion

FY18 FY19 FY20 and Beyond

Scaling Solutions

$1 Billion+ HRS-like margins

Positioned to Deliver Meaningful Earnings Power

% Sketch-to-Scale FY20E

Portfolio Evolution

Sketch-to-Scale

~3%

10%+

12%+

Revenue Adj.Operating

Profit

Adj. EPS

2016–2020 CAGRSubstantial Earnings Leverage

3x4x

Revenue mix CEC

HRSIEI

CTG

FY20E

~45%

CEC CTG IEI HRS

~40%Total Flex

$1.17

~$0.26

~$0.22

~$0.19

~$0.02 ~$0.02 ~$0.12 ~$0.20

$1.80

FY16 FY17 HRS CTG IEI CEC CorporateInvestments

ShareRepurchase

Interest andTaxes

FY20

$1.14

14

The Path to Delivering Substantial Earnings Leverage

» Sketch-to-Scale penetration» Leveraging investments» Operational execution

12%CAGR

$2.15+

Record EPS

$1.55Consensus

Creating Shareholder Value

~3%

10%+

12%+

Revenue Adj. OP Adj. EPS

2016–2020 CAGRSubstantial Earnings Leverage

~3x~4x

+

New Industries

Portfolio Evolution

Sketch-to-Scale

igniting earnings power · 2017. 6. 12. · cec. corporate investments. share repurchase. interest...

Documents