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TRW Automotive Holdings

TRW Automotive Holdings. Equity Investment Presentation. Richie Hartz Ha Da Jang Diana Yang. April 11, 2013. Agenda. Introduction Company Overview Industry Overview Stock Performance Financial Analysis Valuation Recommendation. Introduction. Company. Industry. Valuation.

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TRW Automotive Holdings

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  1. TRW Automotive Holdings Equity Investment Presentation Richie Hartz Ha Da Jang Diana Yang April 11, 2013

  2. Agenda Introduction Company Overview Industry Overview Stock Performance Financial Analysis Valuation Recommendation Introduction Company Industry Valuation

  3. Company Profile • Headquartered in Livonia, Michigan • Employs over 66,000 people worldwide • Approximately 190 facilities in 25 countries • Serves all major OE vehicle manufacturers worldwide • Leading developer and supplier of active and passive safety systems • Four business segments: Chassis Systems, Occupant Safety Systems, Electronics and Automotive Components Braking Steering OSS (Occupant Safety Systems) Electronics Source: Company Report Introduction Company Industry Valuation

  4. Company History 1958: Ramo-Woolridge Corporation merged into Thompson Products, Inc. 2002: TRW Inc. acquired by Northrop Grumman Corp. 2004: TRW Inc. completed IPO on NYSE 1958 1999 2002 2003 2004 2003: Northrop sold TRW Inc.’s automotive operations to an indirect wholly-owned subsidiary of the Company 1999: TRW Inc. acquired Lucas Varity plc, expanded auto product offering Source: Company Report Introduction Company Industry Valuation

  5. Sales Breakdown • Diversified sources of revenue • Limited reliance on any single customer, platform or market • Global footprint - ability to leverage technology and products across customers and regions • Economies of scale – optimize cost structure Breakdown of 2011 Sales of $16.2 bn Geographic Customer Product Source: Company Annual Report 2012 Introduction Company Industry Valuation

  6. Product Segments 2011 Sales of $16.2 bn Chassis Systems • Steering systems • Foundation brakes • ABS • Electronic stability control • Chassis aftermarket Source: Company Annual Report 2012 “Active” Safety “Passive” Safety Electronics • Safety electronics • Driver assist systems • Chassis electronics • Powertrain electronics • RF products Automotive Components • Body Controls • Engine Valves • Fasteners Occupant Safety Systems • Airbags • Seat belts • Steering wheels Introduction Company Industry Valuation

  7. Historical Financials 1.2% 12.9% Source: Company Annual Report 2012 Source: Company Annual Report 2012 Source: Company Annual Report 2012 Source: Company Annual Report 2012 Investment Thesis Company Industry Valuation

  8. Company Profile — Competitive Strengths Source: BaML 2013 Auto Summit Presentation Introduction Company Industry Valuation

  9. Porter’s Five Forces Braking, Steering, and Suspension Segments Threat of New Entrants: Moderate Threat of Substitute Products: High Growing Degree of Outsourcing Bargaining Power of Buyers: High Pricing Pressures Addressed in 2012 10K Bargaining Power of Sellers: Moderate High Concentration of Sellers Intensity of Competition: High Margin Contraction, Low Growth Potential Introduction Company Industry Valuation

  10. Global Outlook • Expected Global Trends • Robust consumer demand is expected to support increased production in North America at a moderate pace • Macro economic uncertainties affecting production in Europe • Continued expected growth in emerging markets Future Growth Drivers • Continued importance of safety and fuel efficiency • Adapting with regulatory demands • Overall industry recovery • Still below trend levels • Long term outlook remains favorable • Keeping up with technological innovation • Expanding growth in emerging markets • Increased government regulations (i.e. Brazil) Expected Industry Production Trends (units in millions) North America China & Brazil Europe Source: BaML 2013 Auto Summit Presentation Introduction Company Industry Valuation

  11. Macroeconomic Indicators Source: Bloomberg Introduction Company Industry Valuation

  12. Commodities Source: Bloomberg Source: Bloomberg (USD/MT) Source: Bloomberg Source: Bloomberg Introduction Company Industry Valuation

  13. Stock Performance Equity Snapshot • Price: $ 55.83 • Beta: 2.13 • Trailing P/E: 7.13 • Forward P/E: 8.53 • PEG Ratio (5 yr. expected): 0.78 • P/B Ratio: 1.82 Source: Finance.yahoo.com • Share Repurchase • Nov 3 – Nov 30: $ 48.37 * 1,707,958 shares • Dec 1 – Dec 31: $ 51.60 * 1,604,533 shares Introduction Company Industry Valuation

  14. Stock Performance – cont’d Source: Capital IQ Introduction Company Industry Valuation

  15. Stock Performance – cont’d Introduction Company Industry Valuation

  16. Key Financial Ratios Source: Company Report Introduction Company Industry Valuation Introduction

  17. Valuation — WACC Analysis Introduction Company Industry Valuation

  18. Valuation Introduction Company Industry Valuation

  19. Valuation — Trading Comparables Introduction Company Industry Valuation

  20. Risks & Decision Drivers Risks Consistently Low P/E Ratio (8.5x Forward) Competitive Market Segment Cyclicality Macroeconomic Landscape • GICS Diversification • Discount to Peers • DCF Valuation Decision Drivers Introduction Company Industry Valuation

  21. Recommendation Watch List Introduction Company Industry Valuation

  22. TRW Automotive Questions?

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