Stifel Conference Blake Moret Chairman and Chief Executive Officer Patrick Goris Senior Vice President and Chief Financial Officer June 12, 2018
SAFE HARBOR STATEMENT THIS PRESENTATION INCLUDES STATEMENTS RELATED TO THE EXPECTED FUTURE RESULTS OF THE COMPANY AND ARE THEREFORE FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTIONS DUE TO A WIDE RANGE OF RISKS AND UNCERTAINTIES, INCLUDING THOSE THAT ARE LISTED IN OUR SEC FILINGS. THIS PRESENTATION ALSO CONTAINS NON-GAAP FINANCIAL INFORMATION AND RECONCILIATIONS TO GAAP ARE INCLUDED IN THE APPENDIX. ALL INFORMATION SHOULD BE READ IN CONJUNCTION WITH OUR HISTORICAL FINANCIAL STATEMENTS. 2
Agenda BUSINESS UPDATE ROK / PTC STRATEGIC PARTNERSHIP CAPITAL DEPLOYMENT UPDATE 3
at A GLANCE $6.3B FISCAL 2017 SALES 22,000 EMPLOYEES 80+ COUNTRIES WORLD S LARGEST COMPANY DEDICATED TO INDUSTRIAL AUTOMATION AND INFORMATION AUTOMATION for a broad range SOLUTIONS of industries SERVING CUSTOMERS FOR 115 YRS Innovation Domain expertise Culture of integrity & corporate responsibility ABOVE-MARKET GROWTH PRODUCTIVITY INTELLECTUAL CAPITAL VALUE CREATION 4
Fiscal 2018 First Half Highlights ORGANIC SALES Broad-based growth across all regions Growth led by heavy industries Automotive sales down YOY, but up sequentially from Q1 to Q2 recovery in MRO business Emerging markets up high single digits 4.4% YOY SEGMENT OPERATING MARGIN Strong performance driven by higher sales and productivity, partially offset by investments Ramping up investments to accelerate profitable growth and increase long-term differentiation First half R&D spend up 9% YOY 150 bps YOY ADJUSTED EPS $3.85, up 17% YOY FREE CASH FLOW Conversion of 108% CAPITAL DEPLOYMENT Redeployed ~$0.9B in dividends and repurchases 5
Fiscal 2018 Second Half Outlook Solid macroeconomic indicators and favorable global manufacturing environment Early stages of manufacturing expansion cycle Continued broad-based organic growth across most regions and verticals Heavy Industry verticals largest growth driver Transportation expected to grow sequentially; flat to slightly down for the full year Strong H1 book-to-bill and backlog expected to drive higher Solutions & Services growth Increasing investments to expand the value of The Connected Enterprise Integration of our software with other design tools Scalable analytics and subscription services 6
Fiscal 2018 Guidance As of April 25, 2018 APRIL GUIDANCE JANUARY GUIDANCE Sales ~ $6.7B ~ $6.7B Organic Growth Range 3.5% to 6.5% 3.5% to 6.5% Currency Translation ~ 2% ~ 2% Divestiture ~ (1)% ~ (1)% Segment Operating Margin ~ 21.5% ~ 21.5% Adjusted Effective Tax Rate ~ 20.5% ~ 21% Adjusted EPS $7.70 - $8.00 $7.60 - $7.90 Free Cash Flow as a % of Adjusted Income ~ 105% ~ 100% Note: As of April 25, 2018 7
ROK / PTC Strategic Partnership 8
P A R T N E R S H I P S T R U C T U R E C O M M E R C I A L R E L AT I O N S H I P S T R U C T U R E Cross-selling and marketing of each other s software for industrial applications Collaboration on integration of products and complementary technology roadmaps ROK s solutions business will be a preferred delivery and implementation provider, supported by a robust ecosystem of partners Where customer applications require other design tools, like CAD and PLM, we have the option of simplified integration of PTC s strong offering in those areas O W N E R S H I P / E Q U I T Y I N V E S T M E N T ROK to invest $1B at a price of $94.50 for ~10.6M shares of PTC stock (~8.4% ownership)* Investment reflects confidence in significant upside for both companies Blake Moret to join PTC Board of Directors effective with closing of equity transaction *Based on PTC s current outstanding shares pro forma for the share issuance to Rockwell Automation 9
S T R A T E G I C A L L I A N C E Leverage companies complementary resources, technologies, industry expertise and market presence S T R A T E G I C R A T I O N A L E Enhanced Customer Value via Industry Leading IIoT Capabilities Combination of offerings creates industryleading industrial information platform with best-in-class IIoT and analytics capabilities Accelerates and expands ability to deliver The Connected Enterprise driven by ROK and PTC s domain and delivery expertise Faster go to market S T R A T E G I C P A R T N E R S H I P Accelerates Profitable Growth Enhances differentiation of our total portfolio Accelerates revenue growth in information solutions and connected services New project delivery revenue streams Increases recurring revenue stream 10
The Connected Enterprise What Sets Us Apart Source: EPG presentation 05/21/2018 BENEFITS OF PTC PARTNERSHIP UNDERSTANDING COMBINING SIMPLIFYING Access to real-time data from the broadest variety of sources Domain expertise to contextualize and convert data into actionable insights Scalable analytics and easy-to-configure enterprise visualization Open architecture partnership approach now including PTC Simplicity of a single platform integrating control and a broader set of information Information Solutions and Connected Services revenue approaching $300M in FY18 Now projecting to more than double by 2022 11
E N H A N C E C U S T O M E R V A L U E Leading IIoT and Scalable Analytics Platform Enabling IT/OT Convergence Industry Application Expertise and Global Delivery Faster time to value through improved device connectivity Improved decision making through enhanced Self Service Analytics Ability to scale and extend solutions from device to cloud Full portfolio of solutions across Design Operate-Maintain lifecycle Commercial and technical resources that can bridge IT/OT domain Combined partner ecosystem that provides access to wide range of IT/OT capabilities Domain expertise across the Design-Operate-Maintain lifecycle IT-centric delivery resources with industrial application expertise Repeatable solutions and programmatic global roll out capabilities Together we have the most comprehensive and flexible information software offering in the industrial space 12
Source: EPG presentation 05/21/2018 Open Secure Scalable 13
ThingWorx Industry-specific MES Applications Vuforia Augmented Reality FactoryTalk Analytics Kepware Communication Drivers Fit for Purpose Applications PLM, CAD Expertise Service Lifecycle Management DESIGN CAD, PLM, SIMULATION DIGITAL THREAD OPERATE MAINTAIN, SUPPLY CHAIN SLM Real-time, Secure Gateway Our combined capabilities create the most comprehensive, flexible industrial information platform in the market 14
Capital Deployment Update 15
Increased Capital Deployment Disciplined Capital Deployment will Continue Source: EPG presentation 05/21/2018 Update since EPG Organic growth mainly P&L investments FY17 restructuring helps fund increased investments while retaining ~35% earnings conversion Acquisitions Expanded corporate development team fully staffed Active pipeline for partnerships and acquisitions Key areas: information software, connected services, process expertise, regional share expansion with smart products Dividends and share repurchases $1.5B Increased share repurchase target from $0.5B to $1.2B for FY18 Increased dividend by 10% in November 2017 and by 10% in April 2018 We retain flexibility to invest in additional value-creating opportunities 16
Conclusion ROK / PTC strategic partnership creates the most comprehensive and flexible information software offering in the industrial space for customers to drive positive business outcomes Partnership complements and accelerates our ability to deliver The Connected Enterprise, accelerating profitable growth with increased recurring revenue streams Equity investment in PTC reflects confidence in significant upside for both companies ROK retains significant financial flexibility to invest in additional value-creating opportunities 17
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