Dinesh C. Paliwal – Chairman, President & CEO Herbert Parker – Chief Financial Officer

download Dinesh C. Paliwal – Chairman, President & CEO Herbert Parker – Chief  Financial  Officer

If you can't read please download the document

description

Third Quarter FY 2013 Highlights. Dinesh C. Paliwal – Chairman, President & CEO Herbert Parker – Chief Financial Officer. Forward Looking Information. - PowerPoint PPT Presentation

Transcript of Dinesh C. Paliwal – Chairman, President & CEO Herbert Parker – Chief Financial Officer

Slide 1

Dinesh C. Paliwal Chairman, President & CEOHerbert Parker Chief Financial Officer

Third Quarter FY 2013 Highlights

0Forward Looking InformationExcept for historical information contained herein, the matters discussed in this earnings release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. One should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements, including but not limited to: (1) our ability to maintain profitability in our infotainment division if there are delays in our product launches which may give rise to significant penalties and increased engineering expense; (2) the loss of one or more significant customers, or the loss of a significant platform with an automotive customer; (3) fluctuations in currency exchange rates, particularly with respect to the value of the U.S.Dollar and the Euro; (4) our ability to successfully implement our global footprint initiative, including achieving cost reductions and other benefits in connection with the restructuring of our manufacturing, engineering, procurement and administrative organizations; (5) fluctuations in the price and supply of raw materials including, without limitation, petroleum, copper, steel, aluminum, synthetic resins, rare metals and rare-earth minerals, or shortages of materials, parts and components; (6) the inability of our suppliers to deliver products at the scheduled rate and disruptions arising in connection therewith; (7) our ability to attract and retain qualified senior management and to prepare and implement an appropriate succession plan for our critical organizational positions; (8) our failure to implement and maintain a comprehensive disaster recovery program; (9) our failure to comply with governmental rules and regulations, including the Foreign Corrupt Practices Act and U.S. export control laws, and the cost of complying with such laws; (10) our ability to maintain a competitive technological advantage through innovation and leading product designs; (11) our failure to maintain the value of our brands and implementing a sufficient brand protection program; and (12) other risks detailed in Harman International Industries, Incorporated Annual Report on Form 10-K for the fiscal year ended June 30, 2012 and other filings made by the Company with the Securities and Exchange Commission.We undertake no obligation to publicly update or revise any forward-looking statement except as required by law. This deck also makes reference to the Companys awarded business, which represents the estimated future lifetime net sales for all customers. The Company's future awarded business does not represent firm customer orders. The Company calculates its awarded business using various assumptions including global vehicle production forecasts, customer take rates for the Companys products, revisions to product life cycle estimates and the impact of annual price reductions, among other factors. These assumptions are updated on an annual basis. The Company updates the estimates quarterly by adding the value of new awards received and subtracting sales recorded during the quarter.

1Q3 FY 13 Overview and Recent HighlightsNet sales of $1.062B; operating income of $66M* Restructuring program on track to deliver $30-35M in 2014European economy and auto sector remain weakMartin acquisition expands Professional Division portfolioiOnRoad acquisition accelerates advanced safety rollout Raised FY2013 EPS guidance to $3.00 from $2.70 - $2.902Home & Multimedia revenues grew 17% with high single digit EBIT %*A non-GAAP measure, see reconciliation of non-GAAP measures in the press release

LTM = Last Twelve Months, ending March 31, 2013, excluding restructuring expenseHARMAN Leader in Infotainment and Audio Technologies3Branded audio for high quality sound in the car, in the home and on the goLifestyle DivisionGlobal LeaderLTM Rev $1,321MLTM EBITDA 14.4%

Navigation, multimedia connectivity and safety solutions for a premium driving experienceInfotainment DivisionGlobal LeaderLTM Rev $2,258MLTM EBITDA 9.2%

Professional DivisionGlobal LeaderLTM Rev $625MLTM EBITDA 15.8%Premium audio and lighting solutions for recording, broadcast, tour and installed sound

LTM Rev ~$4.2B LTM EBITDA 9.3% ~14,300 FTEs

Revenue Growth Trends*Creating Shareholder Value with High Performance Culture4

China 5-year Growth Plan ($M)

Return on Invested Capital (ROIC) Annual UpdatesAnnual Updates

EBITDA Growth Trends*CAGR 122%* In constant currency , excluding restructuringLTM RevenueCAGR 13%4,2592,826LTM EBITDACAGR 64%39880Automotive Awarded Business (Updated Annually) Infotainment Awarded Business Backlog

Audio Awarded Business Backlog

8.610.811.713.02.32.82.93.1

Automotive Awarded Business Backlog10.913.614.616.1CAGR 13.8% All Scalable & High Margin Custom 9%~11% EBIT Systems (Booked Post FY11)

Custom Systems (Booked Pre FY12) 6%~ 8% EBITInfotainment Backlog Rev Segmentation 5Balanced Geographic Sales based on end market demand

FY12$4.4B

FY15Germany74%By maintaining market leadership in North America and Europe, while rapidly growing in BRIC Markets, HARMAN has become a secular and balanced growth companyFY086Financial Performance Q3 FY137EBITDA and EPS are non-GAAP measures and exclude non-recurring items

fQ3 FY13 - Infotainment Division Highlights Start of production of next generation infotainment solution for Mercedes S-ClassExpanded production of recently launched Chrysler UConnect to Jeep vehicles and BMW NBT to Series 1, 3, and 6 modelsIntegrated Apples SIRI into HARMANs head-unit in Ferraris FF infotainment system iOnRoad acquisition accelerates advanced safety growth opportunities

Delivering World Leading Automotive Solutions

8

8Advanced Safety: iOnRoad AcquisitioniOnRoad is a leader in the development of vehicle safety systems (ADAS)Collision Warnings, Lane Departure Warnings & Headway MonitoringIntegration into next gen platforms demonstrated at CES & Geneva Auto ShowsOffered in scalable and custom platformsInfotainment Services to provide upgrade pathway for current installed base Flexible software solution

Safety Drives Infotainment Systems & Services Growth

Accelerates the rollout of new advanced safety features99Q3 FY13 - Lifestyle Division Highlights Grew Car Audio Backlog and Home & Multimedia Revenues

Won several car audio awards across multiple geographic regionsKia Optima & Sedona (Infinity) Maserati (non-branded)FerrariF149 (JBL Professional) Toyota Alphard (JBL)

Multiple car audio SOP launchesLexus IS (Mark Levinson) Mercedes CLA (Harman/Kardon)Kia Soul (Infinity) Chevy Malibu, China (JBL)

Shipped 1+ million wireless portable audio products in the past 2 quartersJBL Flip #1 selling portable audio product (NPD Group)

10

10Q3 FY13 - Professional Division Highlights Expanded Professional Product OfferingEntered lighting & video markets with acquisition of MartinNew Stadium & Venue Awards and CommissionsTwo additional Brazil FIFA World Cup Stadiums (Arena Amazonia and Estadio Nacional)Multiple KTV Venues in ChinaSports Authority Field at Mile High Stadium, DenverDodgers Stadium, Los AngelesMajor Special Events, Festival & ToursU.S. Presidential Inauguration85th Annual Academy Awards & 55th Annual GRAMMY AwardsSuper Bowl XLVII Halftime ShowCarnival at Rio de Janeiro

11Martin acquisition expands Professional Division portfolio11

Executing On All Five Strategic Pillars

Growing Smart Infotainment Profit and market leader with industry leading order backlogTechnology innovator with connected and safe solutions for all segmentsGrow Infotainment Services business from $100M to $500M in 5 yearsGrowing Audio BrandsProfit and market leader with industry leading car audio order backlogLaunching innovative and portable products Growing Emerging MarketsStrong wins in Brazil including FIFA and Olympic stadiumsOptimizing Costs and Capital Structure2013 restructuring on track to deliver $30-35M in annualized savings starting in FY 2014Diversifying PortfolioExpanded Professional Division portfolio to lighting and video

12Framework for Long Term Profitable Growth

Liquidity and Capital Structure1312-24 Months Capital / Cash Allocation ConsiderationsReturn to investment grade lowered cost of capitalContinue to pay dividends at current or higher levelCAPEX projects to drive organic growth (ROIC~20+%)Strategic, accretive acquisitions that accelerate growthMartin Professional closed in Feb 2013iOnRoad closed in Apr 2013Share buybackTotal Liquidity $1.18 BillionMore than 50% of our debt matures in fiscal 2017 and beyondR/C availability

Non U.S. Cash & Short-term Investments

U.S. Cash & Short-term Investments

5 Yr. Term LoanUndrawnSignificant emerging market growth opportunities in all three divisions Sustainable innovation with > 4,600 patents & patents pendingDemand for connected cars drives infotainment systems and servicesHarman Investment ThesisImproving global footprint and cost structureStrong balance sheet with more than $1.18 billion in liquidityIndustry leading order backlog with double digit operating marginsPowerful brand portfolio lifts audio business in home, car and stage14Innovation Drives Long-term Secular GrowthChart1-0.040.0610.0960.1260.137

FY09ROIC

Sheet1ROICColumn1FY11Goal-4.0%FY106.1%FY119.6%FY1212.6%FY1313.7%see goodwill test v3, could be 14.2%To resize chart data range, drag lower right corner of range.

Chart135199269382400

organic35

Sheet1organicm&aFY11GoalFY0935FY10199FY11269FY12382FY13400To resize chart data range, drag lower right corner of range.

Chart15.92.77.4043.4198.1913.518.9784.038

replacementincremental

Sheet1replacementincrementalFY11GoalFY095.92.7FY107.43.4FY118.23.5FY129.04.0To resize chart data range, drag lower right corner of range.

Chart12.10.22.4780.252.5640.2652.6210.424

replacementincremental0.5

Sheet1replacementincrementalFY11GoalFY092.10.2FY102.50.3FY112.60.3FY122.60.4To resize chart data range, drag lower right corner of range.

Chart182.99.8823.66910.7553.78211.5994.462

Renewal of Existing BusinessNew Business and Customersreplacementincremental

Sheet1replacementincrementalFY11GoalFY098.02.9FY109.93.7FY1110.83.8FY1211.64.5To resize chart data range, drag lower right corner of range.

Chart123ROW33EU543NA1BRIC

2008

Sheet1ROWEU5NABRIC20082333431100

Chart118ROW30EU540NA12BRIC

2008

Sheet1ROWEU5NABRIC200818304012100

Chart174Germany26Others

2008

Sheet1GermanyOthers20087426100

Chart115ROW25EU535NA25BRIC

2008EU525%NA35%BRIC25%

Sheet1ROWEU5NABRIC200815253525100

working1ApplicationFinanceScale1000AccountVariesCategoryActualData SourceTotalHIIwithAllocEntityVariesIntercompanyAll_InterCoReporting CurrencyUSDTimeVariesMeasuresPeriodic2011.JAN2011.FEB2011.MAR2011.APR2011.MAY2011.Jun2012.Jul2012.AUG2012.SEP2012.OCT2012.NOV2012.DECLTM10c_alt100115Net Trade Sales#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR394,258398,149334,6231,127,02910c_alt100605Operating Profit#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR36,25733,12526,89396,27410c_alt502001D&A#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR9,5559,4339,72128,710EBITDAERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!45,81242,55836,614ERROR:#VALUE!ERROR:#VALUE!

Infotainment_SEC100115Net Trade Sales#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR218,574222,876158,450599,899Infotainment_SEC100605Operating Profit#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR21,28023,2974,95549,532Infotainment_SEC502001D&A#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR5,0235,0145,32615,363EBITDAERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!26,30328,31110,281ERROR:#VALUE!ERROR:#VALUE!Lifestyle_SEC100115Net Trade Sales#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR121,109123,400124,246368,754Lifestyle_SEC100605Operating Profit#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR14,99210,07424,72849,795Lifestyle_SEC502001D&A#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR2,6992,6822,5947,975EBITDAERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!17,69112,75627,323ERROR:#VALUE!ERROR:#VALUE!2SEC_Alt100115Net Trade Sales#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR54,57551,87351,927158,3762SEC_Alt100605Operating Profit#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR8,4208,9185,90023,2372SEC_Alt502001D&A#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR#RFR1,1201,0401,0773,236EBITDAERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!ERROR:#VALUE!9,5399,9576,977ERROR:#VALUE!ERROR:#VALUE!

&F&A&D &T

chart1% ChangeQ2 FY12Q2 FY11NominalFY10FY09% ChangeLocalHarman InternationalSales112795618%336400%285500%18%19%Operating Income967332%11600%-8600%NM33%% Margin8.5%7.6%EPS0.830.79InfotainmentSales60050120%246800%200500%23%20%Operating Income503541%246800%200500%23%42%% Margin8.3%7.0%LifestyleSales36930720%52300%49300%6%21%Operating Income463725%8000%6200%29%25%% Margin12.6%12.1%ProfessionalSales1581478%37300%35600%5%8%Operating Income272316%300%-1400%NM16%% Margin16.8%15.5%

chart2Quarter Year-Over-YearThree Quarters Year-Over-Year($ in millions, except EPS)Q3 FY13Q3 FY12NominalLocalFY13FY12NominalLocalHARMANSales1,0621,096-3%-3%3,1163,273-5%-2%EBITDA98962%2%292328-11%-8%% Margin9.2%8.8%9.4%10.0%EPS0.790.747%8%2.172.26-4%0%InfotainmentSales569610-7%-7%1,6691813-8%-4%EBITDA4960-19%-19%154190-19%-16%% Margin8.6%9.9%9.2%10.5%LifestyleSales327332-1%-1%9911001-1%2%EBITDA473921%21%1391344%6%% Margin14.3%11.7%14.0%13.4%ProfessionalSales1651538%9%453459-1%0%EBITDA272319%20%72695%6%% Margin16.2%14.7%15.9%15.0%

graph11Q102,743140.5%2Q102,926832.8%3Q103,1741896.0%4Q103,3642417.2%1Q113,4532747.9%2Q113,4812928.4%3Q113,5923208.9%4Q113,7723288.7%1Q123,9863669.2%2Q124,1573899.4%