TE Connectivity announces fourth quarter and full year results for fiscal year 2021

Rhea-AI Summary

TE Connectivity Ltd. (NYSE: TEL) reported strong fourth-quarter and full-year results for fiscal 2021. Net sales reached $3.8 billion in Q4, a 17% increase year-over-year, with an operating margin expansion across all segments. GAAP diluted EPS was $2.40, a 46% increase compared to the previous year. For the full year, net sales totaled $14.9 billion, up 23%, and GAAP EPS improved to $6.77 from a loss of $0.78 in fiscal 2020. The company anticipates $3.7 billion in net sales for Q1 FY22, reflecting a 5% increase.

Positive

• Fourth quarter net sales of $3.8 billion, up 17% year-over-year.
• GAAP diluted EPS of $2.40, a 46% increase from the prior year.
• Full-year net sales of $14.9 billion, a 23% increase from fiscal 2020.
• GAAP EPS for the year improved to $6.77 from a loss of $0.78.

Negative

• None.

SCHAFFHAUSEN, Switzerland, Oct. 27, 2021 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fourth quarter and fiscal year ended Sept. 24, 2021.

Fourth Quarter Highlights

• Net sales were $3.8 billion, up approximately 17% versus prior year on a reported basis.
• Operating margin expansion year over year with strong performance across all segments.
• GAAP diluted earnings per share (EPS) from continuing operations were $2.40, and adjusted EPS were $1.69, an increase of 46% versus the prior year.
• Cash flow from continuing operating activities was $774 million and free cash flow was $536 million.
• Completed acquisition of ERNI Group AG (ERNI), a European connector manufacturer focused on factory automation markets.

Full Year Highlights

• Net sales were $14.9 billion, up 23% from fiscal year 2020.
• Operating margin expansion year over year, with increases across all segments.
• GAAP EPS from continuing operations were $6.77 versus a loss of $0.78 in fiscal year 2020, and adjusted EPS were $6.51, versus $4.26 in fiscal year 2020.
• Cash flow from continuing operating activities was $2.7 billion and free cash flow was $2.1 billion, with approximately $1.5 billion returned to shareholders and over $400 million deployed for acquisitions.
• Company set new ESG commitment to decrease greenhouse gas emissions by over 40% on an absolute basis by 2030.

"We had a strong finish to fiscal 2021 with sales and adjusted earnings in the fourth quarter exceeding expectations despite broader global supply challenges," said TE Connectivity CEO Terrence Curtin. "I am very pleased with our teams' ongoing execution in a very dynamic backdrop. Our performance demonstrates the strength and diversity of our portfolio, which is reflected in sales and earnings above pre-COVID levels. We will continue to benefit from our leadership positions in long-term technology trends of electric vehicles, data and cloud, factory automation and renewable investments, which are enabling us to grow above the markets we serve. We expect to deliver continued growth in both sales and earnings in the first quarter of fiscal 2022."

First Quarter FY22 Outlook

For the first quarter of fiscal 2022, the company expects net sales of approximately $3.7 billion, reflecting an increase of 5% on a reported basis and 4% on an organic basis year over year. GAAP EPS from continuing operations is expected to be approximately $1.50 year over year, with adjusted EPS of approximately $1.60, up 9% year over year.

Information about TE Connectivity's use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables.

Conference Call and Webcast

The company will hold a conference call today beginning at 8:30 a.m. ET. The dial-in information is provided here:

• At TE Connectivity's website: investors.te.com
• By telephone: For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the dial-in number in the United States is (888) 330-3417 and for international callers, the dial-in number is (646) 960-0804.
• A replay of the conference call will be available on TE Connectivity's investor website at investors.te.com at 11:30 a.m. ET on Oct. 27, 2021.

About TE Connectivity

TE Connectivity Ltd. (NYSE: TEL) is a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of connectivity and sensor solutions, proven in the harshest environments, enable advancements in transportation, industrial applications, medical technology, energy, data communications, and the home. With more than 85,000 employees, including over 8,000 engineers, working alongside customers in approximately 140 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedIn, Facebook, WeChat and Twitter.

Non-GAAP Financial Measures

We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. ("GAAP"). These non-GAAP financial measures provide supplemental information and should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe that investors benefit from having access to the same financial measures that management uses in evaluating our operations. The primary limitation of these measures is that they exclude the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies.

The following provides additional information regarding our non-GAAP financial measures:

• Organic Net Sales Growth (Decline) – represents net sales growth (decline) (the most comparable GAAP financial measure) excluding the impact of foreign currency exchange rates, and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic Net Sales Growth (Decline) is a useful measure of our performance because it excludes items that are not completely under management's control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition and divestiture activity. This measure is a significant component in our incentive compensation plans.
• Adjusted Operating Income (Loss) and Adjusted Operating Margin – represent operating income (loss) and operating margin, respectively, (the most comparable GAAP financial measures) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if any. We utilize these adjusted measures in combination with operating income (loss) and operating margin to assess segment level operating performance and to provide insight to management in evaluating segment operating plan execution and market conditions. Adjusted Operating Income (Loss) is a significant component in our incentive compensation plans.
• Adjusted Other Income (Expense), Net – represents net other income (expense) (the most comparable GAAP financial measure) before special items including tax sharing income related to adjustments to prior period tax returns and other items, if any.
• Adjusted Income Tax (Expense) Benefit and Adjusted Effective Tax Rate – represent income tax (expense) benefit and effective tax rate, respectively, (the most comparable GAAP financial measures) after adjusting for the tax effect of special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, other income or charges, and certain significant tax items, if any.
• Adjusted Income (Loss) from Continuing Operations – represents income (loss) from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects.
• Adjusted Earnings (Loss) Per Share – represents diluted earnings (loss) per share from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects. This measure is a significant component in our incentive compensation plans.
• Free Cash Flow (FCF) – is a useful measure of our ability to generate cash. The difference between net cash provided by continuing operating activities (the most comparable GAAP financial measure) and Free Cash Flow consists mainly of significant cash outflows and inflows that we believe are useful to identify. We believe Free Cash Flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated from our operations. Free Cash Flow is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Voluntary pension contributions are excluded from the GAAP financial measure because this activity is driven by economic financing decisions rather than operating activity. Certain special items, including net payments related to pre-separation tax matters and cash paid (collected) pursuant to collateral requirements related to cross-currency swap contracts, are also excluded by management in evaluating Free Cash Flow. Net capital expenditures consist of capital expenditures less proceeds from the sale of property, plant, and equipment. These items are subtracted because they represent long-term commitments. In the calculation of Free Cash Flow, we subtract certain cash items that are ultimately within management's and the Board of Directors' discretion to direct and may imply that there is less or more cash available for our programs than the most comparable GAAP financial measure indicates. It should not be inferred that the entire Free Cash Flow amount is available for future discretionary expenditures, as our definition of Free Cash Flow does not consider certain non-discretionary expenditures, such as debt payments. In addition, we may have other discretionary expenditures, such as discretionary dividends, share repurchases, and business acquisitions, that are not considered in the calculation of Free Cash Flow.

Forward-Looking Statements

This release contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements addressing our future financial condition and operating results, and the impact on our operations resulting from the coronavirus disease 2019 ("COVID-19"). Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, the extent, severity and duration of COVID-19 negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the effects of Swiss tax reform. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. Such developments may include the geographic spread of the virus, the severity of the virus, the duration of the outbreak, the impact on our suppliers' and customers' supply chains, the actions that may be taken by various governmental authorities in response to the outbreak in jurisdictions in which we operate, and the possible impact on the global economy and local economies in which we operate.  More detailed information about these and other factors is set forth in TE Connectivity Ltd.'s Annual Report on Form 10-K for the fiscal year ended Sept. 25, 2020 as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.

 

TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	For the Quarters Ended						For the Years Ended
	September 24,			September 25,			September 24,			September 25,
	2021			2020			2021			2020
	(in millions, except per share data)
Net sales	$	3,818		$	3,261		$	14,923		$	12,172
Cost of sales		2,555			2,292			10,036			8,437
Gross margin		1,263			969			4,887			3,735
Selling, general, and administrative expenses		384			352			1,512			1,392
Research, development, and engineering expenses		173			148			677			613
Acquisition and integration costs		8			9			31			36
Restructuring and other charges, net		38			113			233			257
Impairment of goodwill		—			—			—			900
Operating income		660			347			2,434			537
Interest income		3			2			17			15
Interest expense		(14)			(12)			(56)			(48)
Other income (expense), net		(22)			—			(17)			20
Income from continuing operations before income taxes		627			337			2,378			524
Income tax (expense) benefit		167			(109)			(123)			(783)
Income (loss) from continuing operations		794			228			2,255			(259)
Income from discontinued operations, net of income taxes		—			2			6			18
Net income (loss)	$	794		$	230		$	2,261		$	(241)
Basic earnings (loss) per share:
Income (loss) from continuing operations	$	2.42		$	0.69		$	6.83		$	(0.78)
Income from discontinued operations		—			0.01			0.02			0.05
Net income (loss)		2.42			0.70			6.85			(0.73)
Diluted earnings (loss) per share:
Income (loss) from continuing operations	$	2.40		$	0.69		$	6.77		$	(0.78)
Income from discontinued operations		—			0.01			0.02			0.05
Net income (loss)		2.40			0.69			6.79			(0.73)
Weighted-average number of shares outstanding:
Basic		328			330			330			332
Diluted		331			332			333			332

 

TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	September 24,			September 25,
	2021			2020
	(in millions, except share data)
Assets
Current assets:
Cash and cash equivalents	$	1,203		$	945
Accounts receivable, net of allowance for doubtful accounts of $41 and $29, respectively		2,928			2,377
Inventories		2,511			1,950
Prepaid expenses and other current assets		621			512
Total current assets		7,263			5,784
Property, plant, and equipment, net		3,778			3,650
Goodwill		5,590			5,224
Intangible assets, net		1,549			1,593
Deferred income taxes		2,499			2,178
Other assets		783			813
Total assets	$	21,462		$	19,242
Liabilities, redeemable noncontrolling interests,  and shareholders' equity
Current liabilities:
Short-term debt	$	503		$	694
Accounts payable		1,911			1,276
Accrued and other current liabilities		2,242			1,720
Total current liabilities		4,656			3,690
Long-term debt		3,589			3,452
Long-term pension and postretirement liabilities		1,139			1,336
Deferred income taxes		181			143
Income taxes		302			252
Other liabilities		847			874
Total liabilities		10,714			9,747
Commitments and contingencies
Redeemable noncontrolling interests		114			112
Shareholders' equity:
Common shares, CHF 0.57 par value, 336,099,881 shares authorized and     issued, and 338,953,381 shares authorized and issued, respectively		148			149
Accumulated earnings		11,709			10,348
Treasury shares, at cost, 9,060,919 and 8,295,878 shares, respectively		(1,055)			(669)
Accumulated other comprehensive loss		(168)			(445)
Total shareholders' equity		10,634			9,383
Total liabilities, redeemable noncontrolling interests, and shareholders' equity	$	21,462		$	19,242

 

TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	For the Quarters Ended						For the Years Ended
	September 24,			September 25,			September 24,			September 25,
	2021			2020			2021			2020
	(in millions)
Cash flows from operating activities:
Net income (loss)	$	794		$	230		$	2,261		$	(241)
Income from discontinued operations, net of income taxes		—			(2)			(6)			(18)
Income (loss) from continuing operations		794			228			2,255			(259)
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
Impairment of goodwill		—			—			—			900
Depreciation and amortization		179			181			769			711
Deferred income taxes		(292)			76			(354)			535
Non-cash lease cost		30			29			120			108
Provision for losses on accounts receivable and inventories		14			(14)			46			14
Share-based compensation expense		21			20			94			74
Other		(16)			14			(61)			54
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable, net		120			(245)			(518)			(63)
Inventories		(74)			253			(556)			(89)
Prepaid expenses and other current assets		(5)			24			(19)			51
Accounts payable		(86)			1			560			(80)
Accrued and other current liabilities		63			105			173			(99)
Income taxes		45			(29)			106			(9)
Other		(19)			76			61			143
Net cash provided by continuing operating activities		774			719			2,676			1,991
Net cash provided by discontinued operating activities		—			1			—			1
Net cash provided by operating activities		774			720			2,676			1,992
Cash flows from investing activities:
Capital expenditures		(236)			(121)			(690)			(560)
Proceeds from sale of property, plant, and equipment		1			11			86			17
Acquisition of businesses, net of cash acquired		(297)			(11)			(423)			(339)
Other		(8)			4			(10)			17
Net cash used in investing activities		(540)			(117)			(1,037)			(865)
Cash flows from financing activities:
Net decrease in commercial paper		—			—			—			(219)
Proceeds from issuance of debt		—			—			661			593
Repayment of debt		(2)			—			(708)			(352)
Proceeds from exercise of share options		37			26			167			55
Repurchase of common shares		(313)			—			(831)			(523)
Payment of common share dividends to shareholders		(164)			(159)			(647)			(625)
Transfers from discontinued operations		—			1			—			1
Other		(1)			(2)			(28)			(34)
Net cash used in continuing financing activities		(443)			(134)			(1,386)			(1,104)
Net cash used in discontinued financing activities		—			(1)			—			(1)
Net cash used in financing activities		(443)			(135)			(1,386)			(1,105)
Effect of currency translation on cash		(4)			3			5			(4)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(213)			471			258			18
Cash, cash equivalents, and restricted cash at beginning of period		1,416			474			945			927
Cash, cash equivalents, and restricted cash at end of period	$	1,203		$	945		$	1,203		$	945
Supplemental cash flow information:
Interest paid on debt, net	$	18		$	19		$	58		$	50
Income taxes paid, net of refunds		80			62			371			257

 

TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
	For the Quarters Ended						For the Years Ended
	September 24,			September 25,			September 24,			September 25,
	2021			2020			2021			2020
	(in millions)
Net cash provided by continuing operating activities	$	774		$	719		$	2,676		$	1,991
Excluding:
Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts		(3)			39			9			34
Capital expenditures, net		(235)			(110)			(604)			(543)
Free cash flow (1)	$	536		$	648		$	2,081		$	1,482
(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.
CONSOLIDATED SEGMENT DATA (UNAUDITED)
	For the Quarters Ended												For the Years Ended
	September 24,						September 25,						September 24,						September 25,
	2021						2020						2021						2020
	($ in millions)
	Net Sales						Net Sales						Net Sales						Net Sales
Transportation Solutions	$	2,198					$	1,865					$	8,974					$	6,845
Industrial Solutions		1,017						959						3,844						3,713
Communications Solutions		603						437						2,105						1,614
Total	$	3,818					$	3,261					$	14,923					$	12,172
	Operating Income			Operating Margin			Operating Income			Operating Margin			Operating Income			Operating Margin			Operating Income (Loss)			Operating Margin
Transportation Solutions	$	387		17.6	%		$	198		10.6	%		$	1,526		17.0	%		$	(93)		(1.4)	%
Industrial Solutions		134		13.2				85		8.9				469		12.2				412		11.1
Communications Solutions		139		23.1				64		14.6				439		20.9				218		13.5
Total	$	660		17.3	%		$	347		10.6	%		$	2,434		16.3	%		$	537		4.4	%
	Adjusted Operating Income (1)			Adjusted Operating Margin (1)			Adjusted Operating Income (1)			Adjusted Operating Margin (1)			Adjusted Operating Income (1)			Adjusted Operating Margin (1)			Adjusted Operating Income (1)			Adjusted Operating Margin (1)
Transportation Solutions	$	395		18.0	%		$	245		13.1	%		$	1,679		18.7	%		$	952		13.9	%
Industrial Solutions		162		15.9				133		13.9				557		14.5				522		14.1
Communications Solutions		149		24.7				95		21.7				465		22.1				260		16.1
Total	$	706		18.5	%		$	473		14.5	%		$	2,701		18.1	%		$	1,734		14.2	%
(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.
RECONCILIATION OF NET SALES GROWTH (DECLINE) (UNAUDITED)
	Change in Net Sales for the Quarter Ended September 24, 2021
	versus Net Sales for the Quarter Ended September 25, 2020
	Net Sales Growth (Decline)						Organic Net Sales Growth (Decline) (1)									Acquisition/ (Divestitures)
													Translation (2)
	($ in millions)
Transportation Solutions (3):
Automotive	$	184		13.8	%		$	160		11.7	%		$	24		$	—
Commercial transportation		106		39.8				103		37.9				3			—
Sensors		43		16.3				38		15.4				5			—
Total		333		17.9				301		16.0				32			—
Industrial Solutions (3):
Industrial equipment		96		33.1				91		31.5				5			—
Aerospace, defense, oil, and gas		(51)		(16.5)				(57)		(18.1)				4			2
Energy		5		2.6				15		7.7				—			(10)
Medical		8		4.7				8		4.7				—			—
Total		58		6.0				57		6.2				9			(8)
Communications Solutions (3):
Data and devices		97		37.3				91		35.5				6			—
Appliances		69		39.0				65		35.7				4			—
Total		166		38.0				156		35.6				10			—
Total	$	557		17.1	%		$	514		15.8	%		$	51		$	(8)
	Change in Net Sales for the Year Ended September 24, 2021
	versus Net Sales for the Year Ended September 25, 2020
	Net Sales						Organic Net Sales									Acquisitions/
	Growth (Decline)						Growth (Decline) (1)						Translation (2)			(Divestitures)
	($ in millions)
Transportation Solutions (3):
Automotive	$	1,476		30.1	%		$	1,243		25.0	%		$	233		$	—
Commercial transportation		416		39.6				377		35.2				39			—
Sensors		237		26.6				119		13.4				29			89
Total		2,129		31.1				1,739		25.1				301			89
Industrial Solutions (3):
Industrial equipment		299		27.2				253		22.7				46			—
Aerospace, defense, oil, and gas		(166)		(13.8)				(209)		(17.4)				25			18
Energy		21		2.9				30		4.1				20			(29)
Medical		(23)		(3.3)				(25)		(3.6)				2			—
Total		131		3.5				49		1.3				93			(11)
Communications Solutions (3):
Data and devices		225		23.1				199		20.5				26			—
Appliances		266		41.5				242		37.2				24			—
Total		491		30.4				441		27.2				50			—
Total	$	2,751		22.6	%		$	2,229		18.2	%		$	444		$	78
(1) Organic net sales growth (decline) is a non-GAAP financial measure. See description of non-GAAP financial measures.
(2) Represents the change in net sales resulting from changes in foreign currency exchange rates.
(3) Industry end market information is presented consistently with our internal management reporting and may be periodically revised as management deems necessary.

 

TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended September 24, 2021
(UNAUDITED)
					Adjustments
					Acquisition- Related Charges (1)			Restructuring and Other Charges, Net (1)
																	Adjusted
	U.S. GAAP										Other Items (1) (2)			Tax Items (3)			(Non-GAAP) (4)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	387			$	3		$	5		$	—		$	—		$	395
Industrial Solutions		134				4			24			—			—			162
Communications Solutions		139				1			9			—			—			149
Total	$	660			$	8		$	38		$	—		$	—		$	706
Operating margin		17.3	%															18.5	%
Other income (expense), net	$	(22)			$	—		$	—		$	28		$	—		$	6
Income tax (expense) benefit	$	167			$	(1)		$	3		$	(6)		$	(304)		$	(141)
Effective tax rate		(26.6)	%															20.1	%
Income from continuing operations	$	794			$	7		$	41		$	22		$	(304)		$	560
Diluted earnings per share from continuing operations	$	2.40			$	0.02		$	0.12		$	0.07		$	(0.92)		$	1.69
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract.
(3) Represents a $327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and expected future operating profit and taxable income, and $23 million of income tax expense associated with the tax impacts of an intercompany transaction.
(4) See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended September 25, 2020
(UNAUDITED)
					Adjustments
					Acquisition- Related Charges (1)			Restructuring and Other Charges, Net (1)
														Adjusted
	U.S. GAAP										Tax Items (2)			(Non-GAAP) (3)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	198			$	11		$	36		$	—		$	245
Industrial Solutions		85				2			46			—			133
Communications Solutions		64				—			31			—			95
Total	$	347			$	13		$	113		$	—		$	473
Operating margin		10.6	%												14.5	%
Income tax expense	$	(109)			$	(4)		$	(21)		$	56		$	(78)
Effective tax rate		32.3	%												16.8	%
Income from continuing operations	$	228			$	9		$	92		$	56		$	385
Diluted earnings per share from continuing operations	$	0.69			$	0.03		$	0.28		$	0.17		$	1.16
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Income tax expense related to increases to the valuation allowance for certain deferred tax assets.
(3) See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Year Ended September 24, 2021
(UNAUDITED)
					Adjustments
					Acquisition- Related Charges (1)			Restructuring and Other Charges, Net (1)
																	Adjusted
	U.S. GAAP										Other Items (1) (2)			Tax Items (3)			(Non-GAAP) (4)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	1,526			$	18		$	135		$	—		$	—		$	1,679
Industrial Solutions		469				15			73			—			—			557
Communications Solutions		439				1			25			—			—			465
Total	$	2,434			$	34		$	233		$	—		$	—		$	2,701
Operating margin		16.3	%															18.1	%
Other income (expense), net	$	(17)			$	—		$	—		$	28		$	—		$	11
Income tax expense	$	(123)			$	(7)		$	(35)		$	(6)		$	(333)		$	(504)
Effective tax rate		5.2	%															18.9	%
Income from continuing operations	$	2,255			$	27		$	198		$	22		$	(333)		$	2,169
Diluted earnings per share from continuing operations	$	6.77			$	0.08		$	0.59		$	0.07		$	(1.00)		$	6.51
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract.
(3) Represents a $327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and expected future operating profit and taxable income, $29 million of income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets, and $23 million of income tax expense associated with the tax impacts of an intercompany transaction.
(4) See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Year Ended September 25, 2020
(UNAUDITED)
					Adjustments
					Acquisition- Related Charges (1)			Restructuring and Other Charges, Net (1)
											Impairment of Goodwill (1)						Adjusted
	U.S. GAAP													Tax Items (2)			(Non-GAAP) (4)
	($ in millions, except per share data)
Operating income (loss):
Transportation Solutions	$	(93)			$	32		$	113		$	900		$	—		$	952
Industrial Solutions		412				8			102			—			—			522
Communications Solutions		218				—			42			—			—			260
Total	$	537			$	40		$	257		$	900		$	—		$	1,734
Operating margin		4.4	%															14.2	%
Other income, net	$	20			$	—		$	—		$	—		$	(8)		$	12
Income tax expense	$	(783)			$	(8)		$	(46)		$	(4)		$	550		$	(291)
Effective tax rate		149.4	%															17.0	%
Income (loss) from continuing operations	$	(259)			$	32		$	211		$	896		$	542		$	1,422
Diluted earnings (loss) per share from continuing operations (3)	$	(0.78)			$	0.10		$	0.63		$	2.68		$	1.62		$	4.26
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Includes $355 million of income tax expense related to the tax impacts of certain measures of Swiss tax reform and $226 million of income tax expense related to increases to the valuation allowance for certain deferred tax assets, partially offset by a $31 million income tax benefit related to pre-separation tax matters and the termination of the tax sharing agreement with Tyco International and Covidien.
(3) U.S. GAAP diluted shares excludes two million of nonvested share awards and options outstanding as the inclusion of these securities would have been antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares.
(4) See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended December 25, 2020
(UNAUDITED)
					Adjustments
					Acquisition- Related Charges (1)			Restructuring and Other Charges, Net (1)
														Adjusted
	U.S. GAAP										Tax Items (2)			(Non-GAAP) (3)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	308			$	5		$	118		$	—		$	431
Industrial Solutions		76				4			38			—			118
Communications Solutions		64				—			11			—			75
Total	$	448			$	9		$	167		$	—		$	624
Operating margin		12.7	%												17.7	%
Other expense, net	$	(1)			$	—		$	—		$	—		$	(1)
Income tax expense	$	(60)			$	(2)		$	(32)		$	(29)		$	(123)
Effective tax rate		13.8	%												20.1	%
Income from continuing operations	$	375			$	7		$	135		$	(29)		$	488
Diluted earnings per share from continuing operations	$	1.13			$	0.02		$	0.41		$	(0.09)		$	1.47
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets.
(3) description of non-GAAP financial measures.

     

 

TE CONNECTIVITY LTD.
RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of October 27, 2021
(UNAUDITED)
	Outlook for
	Quarter Ending
	December 24,
	2021
Diluted earnings per share from continuing operations	$	1.50
Restructuring and other charges, net		0.12
Acquisition-related charges		0.03
Tax items		(0.05)
Adjusted diluted earnings per share from continuing operations (1)	$	1.60
Net sales growth		5.0	%
Translation		0.6
(Acquisitions) divestitures, net		(1.5)
Organic net sales growth (1)		4.1	%
(1) See description of non-GAAP financial measures.

 

 

 

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SOURCE TE Connectivity Ltd.

FAQ

What were TE Connectivity's Q4 2021 financial results?

TE Connectivity's Q4 2021 net sales reached $3.8 billion, a 17% increase year-over-year, with GAAP diluted EPS at $2.40.

What is TE Connectivity's expected outlook for Q1 FY22?

TE Connectivity expects Q1 FY22 net sales of approximately $3.7 billion, reflecting a 5% year-over-year increase.

How did TE Connectivity perform in fiscal year 2021?

In fiscal year 2021, TE Connectivity reported net sales of $14.9 billion, up 23% from the previous year, with GAAP EPS improving to $6.77.

What are the key drivers of growth for TE Connectivity?

TE Connectivity's growth is driven by leadership positions in electric vehicles, data, cloud, factory automation, and renewable investments.