Fairchild PowerPoint Presentation Template functions for key customers . 5 • Energy efficiency,...
Transcript of Fairchild PowerPoint Presentation Template functions for key customers . 5 • Energy efficiency,...
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Notes on Forward Looking Statements
and Non-GAAP Measures • Comments in this presentation other than statements of historical fact may constitute forward looking statements and are
based on Fairchild’s management’s estimates and projections and are subject to various risks and uncertainties
• These risks and uncertainties are described in the Company’s periodic reports and other filings with the Securities and Exchange Commission (see the Risk Factors section) and are available at http://sec.gov and investor.fairchildsemi.com
• Actual results may differ materially from those projected in the forward looking statements
• Some data in this presentation may include non-GAAP measures that we believe provide useful information about the operating performance of our businesses that should be considered by investors in conjunction with GAAP measures that we also provide. You can find a reconciliation of non-GAAP to comparable GAAP measures at the Investor Relations section of our web site at http://investor.fairchildsemi.com
Recent additions to our website at http://investor.fairchildsemi.com
Updated Financials (through current quarter with segment revenue/gross margin breakouts)
• Quarterly Fact Sheet with current quarter highlights
• This investor presentation
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Fairchild Today…
Fairchild Semiconductor
2014 Revenue $1.43B Mobile, Computing, Consumer &
Communications Group
(MCCC)
(38% of 2014 Revenue)
Mobile Power
Switches & Interface
Signal Conditioning
LV MOSFETs
Logic
Comprehensive offering of low voltage solutions (<200V)
Power Conversion, Industrial & Automotive Group
(PCIA)
(52% of 2014 Revenue)
Power Conversion
HV MOSFET & IGBT
SPM
Automotive
Opto
Comprehensive offering of high voltage solutions (>200V)
Standard Products Group
(SPG)
(10% of 2014 Revenue)
Standard discrete & analog
Essential functions for key customers
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• Energy efficiency, mobility and cloud
mega-trends
• Power silicon content grows faster than
end market sales – premium paid for
efficiency
• Fairchild has deep power system
knowledge to support greater integration
and higher efficiency
• Company focused on delighting all
customers from large OEMs to the ―long
tail‖
Markets That Drive Our Business
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Building a Great Leadership Team
• Promoting from within in areas of progress
Automotive, Supply Chain, Assembly & Test
• Recruiting & upgrading in areas of weakness
Sales & Marketing, Fab Operations, Engineering
• Opportunistically adding talent
Strategy, Finance
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Building a Great Company
SALES &
MARKETING
TECHNOLOGY
OPERATIONS
BUSINESS
UNITS
• Solid operations org is key foundation
• Sales & marketing as well as
technology also well in place
• Business units key focus now
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Our Culture
EXCEL
ENGAGED EMPLOYEE
DELIGHTED CUSTOMER
RESPECT
SPEED
EXPLORE SIMPLIFY
PLAY
DIRECT
WORLD-
CLASS
COMPANY
CHALLENGE
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Strategy as a Daily Activity
Differentiated Products
Application-Centric
Customer Focus
Product-Centric
BEFORE
Commoditized Technology Approach
NOW
Driving Innovation & Disruption
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$0
$6
$12
$18
$24
$30
$36 $
B U
SD
MOBILITY
ENERGY
CLOUD
App-Centric vs. Product-Centric Fairchild Addresses 45% of the TAM in 2018
New
strategic
focus
areas
enable
Fairchild to
address
45% of
TAM
$24.6B TAM
2013 2018
Source: TAM – WSTS 2014 Spring Forecast (excluding standard products, such as logic)
Addressable Percentage - Fairchild Internal Data
$32.2B TAM
% of TAM addressed based on product-centric % of TAM with new strategic focus
13%
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All companies have PRODUCTS
Good companies have STRATEGY
LINKING the two
LEADS TO a
GREAT company
50,000 ft
1,000 ft
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13
50,000 ft
1,000 ft
CLOUD ENERGY MOBILITY
25vFET 100vFET 600vFET GATE DRIVER MUX INTEGRATED SOLUTION WIRELESS IC DIODE FUEL GAUGE
CHARGER
Systems solutions
that serve the
needs
Technologies that
build the systems
50 product ideas
Power System in
Package,
Sensing Systems,
Intelligent Sensors
Today
Application Themes: Customer Empathy
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Controller IP
Isolation IP
LV/MV FET IP Packaging IP
Driver IP
Sensor IP
HV FET IP
COMPETITOR
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Power Systems Landscape
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Controller IP
Isolation IP
LV/MV FET IP HV FET IP
Sensor IP
Driver IP
Packaging IP
Controller IP
Isolation IP Sensor IP
Driver IP
HV FET IP LV/MV FET IP
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Power Systems Landscape
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Megatrend/Insight Datacenter operators care about total cost of operations (i.e. end-end efficiency)
Application
Technology
Fairchild Differentiation
Market Potential $700M in 2018
Strategy to Revenue Datacenter
High Voltage
IGBT
Med Voltage
MODULE
Low Voltage
MODULE
Competitor 1 Competitor 2
Fairchild = End-to-End Solution Provider
Competitor 3
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Megatrend/Insight Consumers don’t want to think about charging
Application Mobile, Phone, & Tablet
Technology Adaptive, Smart-Charging ICs
Design In 2015 Large Chinese Mobile Customer — Fairchild Total System Solution Fairchild communications protocol enables customers to provide a total system solution, from wall AC adaptor to battery.
Market Potential $3.8B in 2018
Strategy to Revenue Wall to Battery (W2B)
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Megatrend Reduce vehicle CO2 emissions through electrification
Insight 48V Technology allows OEMs to reduce losses and provides better return ($ spent / CO2 reduction)
Application of Focus Mild hybrid
Technologies High-performance power modules SPM®
Design In 2015 3 Tier 1, 4 OEM in 3 continents
Market Potential $2.1B in 2018
Strategy to Revenue Automotive
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Megatrend/Insight Autonomous machine control
Application Industrial internet of things and wearables, from drones, robotic vacuums to technical clothing
Technology MTi family: 3D motion hardware and software modules
Target Customer Broad industrial applications and wearables
Market Potential $1.4B* in 2018
Strategy to Revenue Motion Tracking
* Does not include Smart Phone applications
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Sales Overview
• Foundation — New sales strategy
• People — New leaders, skills, mindset
• Deployment — New growth opportunities
• Execution — New customer engagement model
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Foundation New Sales Strategy
• DEMAND CREATION - Design In/Win — shift coverage to R&D
- System approach — understand the application
- Customer empathy — fill a latent need, solve a problem
• CLOSER TO CUSTOMERS - Proximity — quick response
- Adaptive — fragmented customer base
- Agile — early engagement with emerging customers
• ACCOUNTABILITY - Revenue accountability moved to design origin
- Pay on results — new sales bonus on design-in, revenue growth
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• NEW SKILLS – VALUE ADDED TO CUSTOMERS
- More technical sales – EE
- More Field Applications Engineers (FAE) – FAE as application experts
• NEW MINDSET – PROACTIVE, DRIVE DEMAND
- More field-based people, less operations
- Relationship-builders
People New Leaders, Skills, Mindset
JOSEPH KARIM Americas VP
22 years Atmel, Intersil, ADI
ANDY LAI China VP 22 years
ADI, NSC, TI
ANDREAS HAMMER EMEA VP 16 years SiLabs, TI
JOSEPH NOTARO Motion Tracking VP
22 years STM
WEI LI Taiwan GM
20 years Lucent, Maxim
• RAISING THE BAR – NEW LEADERSHIP TEAM
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Resources Best Deployed
• Increase investment on most significant markets
- China
- Germany
- Silicon Valley
• Shift resources to most promising opportunities
- Generated revenue vs. transacted revenue locations
- Invest where the growth will be vs. where revenue is today
- Aligned company focus segments
• Expand customer base
- More in fragmented markets: (i.e. Industrial, Auto)
- Emerging segments and customers: (i.e. Wearables)
- Mass market
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Resources Go-to-Market
ASSIGNED
ACCOUNTS
MASS MARKET
LONG TAIL
Growth
Potential
• Biggest growth opportunity
• Focus, depth — 80% of resources
• Demand creation
• More customers
• Leveraging distribution
• More engineers
• Leverage the web & catalog distributors
• Build brand awareness
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New Customer Engagement
• CUSTOMERS DRIVE PRODUCT DEFINITION - System expertise provides unique insight - FAE conduit of customer pain points
• INCREASE COMPLETE RECEIVED VALUE
- Product to solution, design expertise - Supply chain excellence - No EOL policy
• RELATIONSHIPS MAKE A DIFFERENCE
- Attention to every customer - Focus on customer empathy
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• CLOUD & TELECOM - Move to IC & System approach - More strategic engagement - Growth acceleration
• MOBILE POWER & W2B - Full end-end solution - Huge value to customer - Major ASP increase YR13 Y14 $M Y15 $M Y16 $M
Others
Mobile Power & W2B
Cloud & Telecom
Source: Fairchild Internal Data
Execution Customer Showcase Relationship, Focus, System Approach Drives Growth
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Why Reposition The Brand?
• Brand history: older company & commodity sales Stagnation in customer growth & revenue
• A new Fairchild brand Energize employees
Attract top-notch engineering & sales talent
Grow relationships with design engineers
• Long-Tail customers create innovative products
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New Branding ―Xiantong‖ in China
• Historical significance
• Strong awareness
• Positive connotation
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New Go-to-Market Website: Optimized for Long-Tail Lead Generation
• SHIFT commodity sales content to
value-added content
• MOVE design engineers through
the entire buying journey
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New Go-to-Market Success Via Power Seminars in 2014
• 3x new customer leads
• Scalability
Live streaming to remote locations
Post-seminar engagement
• Wider awareness
New prospects
Social media & community
Boston, MA – May 1
Taichung, Taiwan – May 15
Beijing, China – May 20
Shenzhen, China – May 22
San Jose, CA – June 3
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New Go-to-Market Success Via Accelerating Customer Acquisition
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
# of CustomerLocations
Source: Fairchild Internal Data
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Highlights of the Quarter – Q4 2014 Sales were $337m, down 12% QoQ due to under-shipping distribution channel sell through
Full year 2014 sales were up 2% despite weakness at one large customer (3 point impact)
Double digit sales growth into auto, battery charging, comm infrastructure & data center…expect same type growth in 2015
Mobile sales down in 2014 due to one large customer…deign wins expected to drive overall sales growth in 2015
Demand was seasonally lower in most end markets…bookings light in Oct & Nov…Dec stronger…Significant strength in Jan
Channel inventory decreased $8m to 9 weeks of inventory. Fairchild maintains one of the leanest inventory positions in the
industry
Adjusted gross margin was down 3 points to 32.4% due to lower loadings in prior quarter and higher inventory write offs
OPEX was lower than forecast at $92m, down 4% QoQ due to ongoing cost controls and lower variable compensation
Free cash flow was $33m in Q4 and up 38% for 2014 to $139m. Net cash was higher QoQ at $155m
Repurchased 10m shares in 2014 for $142m…plan to continue returning 100% of excess free cash flow in 2015
Lead times remain short and supply chain is well positioned to support turns business
Manufacturing consolidation remains on track to significantly improve flexibility and margins in the 2H 2015
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Q1 Forward Guidance Provided at Q4 Earnings Call
• Sales expected to be $340 – 360m
• Gross margin expected to be 31 – 32% due primarily to lower factory
utilization in prior quarter and resumption of payroll-related taxes
• R&D and SG&A forecast at $94 to 96m
• Adjusted tax rate forecast to be between 12% +/-3%
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Balance Sheet Improvement Disciplined Asset Management
• Q4 balance sheet summary:
• Cash and investments exceed debt by $155m
• Internal inventory increased to 106 DOI due to bridge inventory required to complete factory closures
• DSO flat QoQ at 34 days
• Days of payables increased QoQ to 42 days
• FCF was $33m for Q4 and +38% for the full year 2014 to $139m
• Primary focus remains investing in our business and enhanced buyback
• Repurchased 10m shares of stock for $142m in 2014
• Plan to return 100% of excess FCF to investors in 2015
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Debt Composition
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1997 1999 2001 2007 2008 2009 2010 2011 2012 2013
Drawn Revolver Term Loan Convert High Yield
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Net Debt & Interest Trend
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
-$700.0
-$600.0
-$500.0
-$400.0
-$300.0
-$200.0
-$100.0
$0.0
$100.0
$200.0
$300.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1 '14 Q2 '14 Q3 '14
Net Cash Interest % of Revenue
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