TE Connectivity announces fourth quarter and full year results for fiscal year 2023

Rhea-AI Summary

TE Connectivity Ltd. (NYSE: TEL) reported Q4 earnings per share that exceeded guidance. Full-year results showed strong margin and EPS expansion from the first half to the second half. Record cash was generated for both the quarter and the full year.

Positive

• Q4 earnings per share exceeded guidance.
• Full-year results reflected strong margin and EPS expansion from the first half to the second half.
• Record cash was generated for the quarter and the full year.

Negative

• None.

Q4 earnings per share exceed guidance;
Full year results reflect strong margin and EPS expansion from first half to second half;
Record cash generated for the quarter and the full year

SCHAFFHAUSEN, Switzerland, Nov. 1, 2023 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter and year ended Sept. 29, 2023.

Fourth Quarter Highlights

• Net sales were $4 billion, essentially flat on a reported basis and down 2% organically, when comparing both to a 13-week fourth quarter in fiscal year 2022.
• GAAP diluted earnings per share (EPS) from continuing operations were $1.75, down 21% year over year.
• Adjusted EPS were $1.78, an increase of 2% versus the prior year on a 13-week comparison basis.
• Orders were $3.9 billion, with sequential growth in the Transportation and Communications segments.
• Cash flow from operating activities was $1.1 billion and free cash flow was $945 million, both quarterly records, as the company continues to demonstrate its strong cash generation model.

Full Year Highlights

• Net sales were $16 billion, essentially flat on a reported basis despite currency exchange headwinds of $430 million, and up 3% organically, with growth in the Transportation and Industrial segments, when comparing both to a 52-week prior year.
• GAAP EPS from continuing operations were $6.01, down 20% year over year.
• Adjusted EPS were $6.74, down 6% versus the prior year on a 52-week comparison basis.
• Strong margin and EPS expansion in the second half compared to the first half of the year, driven by strong operational performance.
• Cash flow from operating activities was $3.1 billion and free cash flow was $2.4 billion, both company records, with approximately $1.7 billion returned to shareholders.

"I'm pleased with our strong finish to fiscal 2023, as we delivered earnings above guidance for the quarter along with record cash flow that resulted in over 100% free cash flow conversion," said TE Connectivity CEO Terrence Curtin. "For the full year, our teams delivered year-over-year organic sales growth in our Transportation and Industrial segments, as the strength and diversity of our portfolio allowed us to overcome cyclicality in some of our end markets and headwinds from currency exchange. In Transportation, we continued to capitalize on our leading global position in electric vehicles to drive sales growth and, importantly, expand margins in the second half. Our Industrial segment demonstrated continued growth momentum in renewable energy applications and benefited from ongoing recovery in the commercial air and medical markets. While our Communications segment declined in 2023 as expected, we are seeing positive momentum from artificial intelligence applications where our high-speed connectivity solutions and engineering expertise have resulted in key design wins with technology leaders.

"As we look to the year ahead, while we remain in a dynamic market environment, we are confident in our ability to drive profitable growth leveraging key trends including e-mobility, renewable energy and artificial intelligence, where our advanced technology and close customer partnerships are helping to create a safer, sustainable, productive and connected future."

First Quarter FY24 Outlook

For the first quarter of fiscal 2024, the company expects net sales of approximately $3.85 billion, flat on both a reported and organic basis year over year. GAAP EPS from continuing operations are expected to be approximately $1.59, up 27% year over year, with adjusted EPS of approximately $1.70, up more than 10% year over year, with strong margin expansion.

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 for investors today beginning at 8:30 a.m. ET. The conference call may be accessed in the following ways:

• 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 Nov. 1, 2023.

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 and Adjusted Operating Margin – represent operating income 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 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 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 from Continuing Operations – represents income 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 Per Share – represents diluted earnings 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
• Net Sales Excluding the Impact of the Additional Week, Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Organic Net Sales Growth (Decline) Excluding the Impact of the Additional Week, and Adjusted Earnings Per Share Excluding the Impact of the Additional Week – represent certain GAAP and non-GAAP financial measures excluding the impact of the additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length.
• Free Cash Flow (FCF) – is a useful measure of our ability to generate cash. The difference between net cash provided by 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 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.
• Free Cash Flow Conversion – represents the ratio of Free Cash Flow to Adjusted Income from Continuing Operations. We use Free Cash Flow Conversion as an indicator of our ability to convert earnings to cash.

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. 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 business interruptions, such as the coronavirus disease 2019 ("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, including continuing military conflict between Russia and Ukraine resulting from Russia's invasion of Ukraine or escalating tensions in surrounding countries; 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. 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 30, 2022, 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 29,			September 30,			September 29,			September 30,
	2023			2022			2023			2022
	(in millions, except per share data)
Net sales	$	4,035		$	4,359		$	16,034		$	16,281
Cost of sales		2,750			3,010			10,979			11,037
Gross margin		1,285			1,349			5,055			5,244
Selling, general, and administrative expenses		412			412			1,670			1,584
Research, development, and engineering expenses		174			179			708			718
Acquisition and integration costs		7			16			33			45
Restructuring and other charges, net		57			82			340			141
Operating income		635			660			2,304			2,756
Interest income		21			6			60			15
Interest expense		(19)			(18)			(80)			(66)
Other income (expense), net		(3)			4			(16)			28
Income from continuing operations before income taxes		634			652			2,268			2,733
Income tax (expense) benefit		(81)			56			(364)			(306)
Income from continuing operations		553			708			1,904			2,427
Income (loss) from discontinued operations, net of income taxes		(1)			—			6			1
Net income	$	552		$	708		$	1,910		$	2,428
Basic earnings per share:
Income from continuing operations	$	1.77		$	2.22		$	6.04		$	7.51
Income (loss) from discontinued operations		—			—			0.02			—
Net income		1.76			2.22			6.06			7.52
Diluted earnings per share:
Income from continuing operations	$	1.75		$	2.21		$	6.01		$	7.47
Income (loss) from discontinued operations		—			—			0.02			—
Net income		1.75			2.21			6.03			7.47
Weighted-average number of shares outstanding:
Basic		313			319			315			323
Diluted		316			321			317			325

 

TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	September 29,			September 30,
	2023			2022
	(in millions, except share data)
Assets
Current assets:
Cash and cash equivalents	$	1,661		$	1,088
Accounts receivable, net of allowance for doubtful accounts of $30 and $45, respectively		2,967			2,865
Inventories		2,552			2,676
Prepaid expenses and other current assets		712			639
Total current assets		7,892			7,268
Property, plant, and equipment, net		3,754			3,567
Goodwill		5,463			5,258
Intangible assets, net		1,175			1,288
Deferred income taxes		2,600			2,498
Other assets		828			903
Total assets	$	21,712		$	20,782
Liabilities, redeemable noncontrolling interests, and shareholders' equity
Current liabilities:
Short-term debt	$	682		$	914
Accounts payable		1,563			1,593
Accrued and other current liabilities		2,218			2,125
Total current liabilities		4,463			4,632
Long-term debt		3,529			3,292
Long-term pension and postretirement liabilities		728			695
Deferred income taxes		185			244
Income taxes		365			304
Other liabilities		787			718
Total liabilities		10,057			9,885
Commitments and contingencies
Redeemable noncontrolling interests		104			95
Shareholders' equity:
Common shares, CHF 0.57 par value, 322,470,281 shares authorized and issued, and 330,830,781 shares authorized and issued, respectively		142			146
Accumulated earnings		12,947			12,832
Treasury shares, at cost, 10,487,742 and 12,749,540 shares, respectively		(1,380)			(1,681)
Accumulated other comprehensive loss		(158)			(495)
Total shareholders' equity		11,551			10,802
Total liabilities, redeemable noncontrolling interests, and shareholders' equity	$	21,712		$	20,782

 

TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	For the Quarters Ended						For the Years Ended
	September 29,			September 30,			September 29,			September 30,
	2023			2022			2023			2022
	(in millions)
Cash flows from operating activities:
Net income	$	552		$	708		$	1,910		$	2,428
(Income) loss from discontinued operations, net of income taxes		1			—			(6)			(1)
Income from continuing operations		553			708			1,904			2,427
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		200			188			794			785
Deferred income taxes		44			(129)			(77)			(147)
Non-cash lease cost		23			33			129			131
Provision for losses on accounts receivable and inventories		(6)			(9)			76			70
Share-based compensation expense		28			31			123			119
Impairment of held for sale businesses		7			14			74			14
Other		16			28			101			9
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable, net		56			308			(146)			200
Inventories		278			398			(45)			(41)
Prepaid expenses and other current assets		47			(7)			17			50
Accounts payable		(69)			(348)			(1)			(396)
Accrued and other current liabilities		35			(82)			21			(398)
Income taxes		(34)			(21)			17			32
Other		(40)			(168)			145			(387)
Net cash provided by operating activities		1,138			944			3,132			2,468
Cash flows from investing activities:
Capital expenditures		(194)			(212)			(732)			(768)
Proceeds from sale of property, plant, and equipment		1			8			4			106
Acquisition of businesses, net of cash acquired		(2)			(104)			(110)			(220)
Proceeds from divestiture of businesses, net of cash retained by businesses sold		—			—			48			16
Other		—			(2)			22			(12)
Net cash used in investing activities		(195)			(310)			(768)			(878)
Cash flows from financing activities:
Net increase (decrease) in commercial paper		42			133			(40)			370
Proceeds from issuance of debt		—			—			499			588
Repayment of debt		—			—			(591)			(558)
Proceeds from exercise of share options		10			20			43			54
Repurchase of common shares		(271)			(326)			(945)			(1,412)
Payment of common share dividends to shareholders		(184)			(179)			(725)			(685)
Other		(4)			(2)			(34)			(41)
Net cash used in financing activities		(407)			(354)			(1,793)			(1,684)
Effect of currency translation on cash		(6)			(12)			2			(21)
Net increase (decrease) in cash, cash equivalents, and restricted cash		530			268			573			(115)
Cash, cash equivalents, and restricted cash at beginning of period		1,131			820			1,088			1,203
Cash, cash equivalents, and restricted cash at end of period	$	1,661		$	1,088		$	1,661		$	1,088
Supplemental cash flow information:
Interest paid on debt, net	$	27		$	19		$	75		$	58
Income taxes paid, net of refunds		71			95			425			421

 

TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
	For the Quarters Ended						For the Years Ended
	September 29,			September 30,			September 29,			September 30,
	2023			2022			2023			2022
	(in millions)
Net cash provided by operating activities	$	1,138		$	944		$	3,132		$	2,468
Excluding:
Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts		—			5			—			(23)
Capital expenditures, net		(193)			(204)			(728)			(662)
Free cash flow (1)	$	945		$	745		$	2,404		$	1,783
(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 29,						September 30,						September 29,						September 30,
	2023						2022						2023						2022
	($ in millions)
	Net Sales						Net Sales						Net Sales						Net Sales
Transportation Solutions	$	2,413					$	2,447					$	9,588					$	9,219
Industrial Solutions		1,159						1,244						4,551						4,490
Communications Solutions		463						668						1,895						2,572
Total	$	4,035					$	4,359					$	16,034					$	16,281
	Operating			Operating			Operating			Operating			Operating			Operating			Operating			Operating
	Income			Margin			Income			Margin			Income			Margin			Income			Margin
Transportation Solutions	$	411		17.0	%		$	347		14.2	%		$	1,451		15.1	%		$	1,534		16.6	%
Industrial Solutions		162		14.0				177		14.2				602		13.2				607		13.5
Communications Solutions		62		13.4				136		20.4				251		13.2				615		23.9
Total	$	635		15.7	%		$	660		15.1	%		$	2,304		14.4	%		$	2,756		16.9	%
	Adjusted			Adjusted			Adjusted			Adjusted			Adjusted			Adjusted			Adjusted			Adjusted
	Operating			Operating			Operating			Operating			Operating			Operating			Operating			Operating
	Income (1)			Margin (1)			Income (1)			Margin (1)			Income (1)			Margin (1)			Income (1)			Margin (1)
Transportation Solutions	$	444		18.4	%		$	407		16.6	%		$	1,665		17.4	%		$	1,618		17.6	%
Industrial Solutions		184		15.9				204		16.4				713		15.7				705		15.7
Communications Solutions		71		15.3				146		21.9				299		15.8				643		25.0
Total	$	699		17.3	%		$	757		17.4	%		$	2,677		16.7	%		$	2,966		18.2	%
(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 29, 2023
	versus Net Sales for the Quarter Ended September 30, 2022
	Net Sales						Organic Net Sales									Acquisitions/
	Growth (Decline)						Growth (Decline) (1)						Translation (2)			(Divestiture)
	($ in millions)
Transportation Solutions (3):
Automotive	$	35		2.0	%		$	11		0.8	%		$	24		$	—
Commercial transportation		(54)		(12.8)				(59)		(14.1)				5			—
Sensors		(15)		(5.0)				(21)		(7.2)				6			—
Total		(34)		(1.4)				(69)		(2.8)				35			—
Industrial Solutions (3):
Industrial equipment		(125)		(24.4)				(137)		(26.9)				12			—
Aerospace, defense, and marine		10		3.2				21		6.7				7			(18)
Energy		6		2.7				(5)		(2.2)				2			9
Medical		24		12.4				23		11.9				1			—
Total		(85)		(6.8)				(98)		(7.9)				22			(9)
Communications Solutions (3):
Data and devices		(140)		(32.3)				(143)		(33.1)				2			1
Appliances		(65)		(27.7)				(66)		(27.9)				1			—
Total		(205)		(30.7)				(209)		(31.3)				3			1
Total	$	(324)		(7.4)	%		$	(376)		(8.6)	%		$	60		$	(8)
	Change in Net Sales for the Year Ended September 29, 2023
	versus Net Sales for the Year Ended September 30, 2022
	Net Sales						Organic Net Sales									Acquisitions/
	Growth (Decline)						Growth (Decline) (1)						Translation (2)			(Divestiture)
	($ in millions)
Transportation Solutions (3):
Automotive	$	424		6.5	%		$	662		10.2	%		$	(238)		$	—
Commercial transportation		(57)		(3.6)				(17)		(1.1)				(40)			—
Sensors		2		0.2				20		1.8				(18)			—
Total		369		4.0				665		7.2				(296)			—
Industrial Solutions (3):
Industrial equipment		(198)		(10.4)				(154)		(8.1)				(44)			—
Aerospace, defense, and marine		91		8.4				139		12.8				(10)			(38)
Energy		79		9.8				77		9.6				(22)			24
Medical		89		12.8				91		13.1				(2)			—
Total		61		1.4				153		3.4				(78)			(14)
Communications Solutions (3):
Data and devices		(444)		(27.6)				(437)		(27.2)				(26)			19
Appliances		(233)		(24.1)				(211)		(21.8)				(22)			—
Total		(677)		(26.3)				(648)		(25.2)				(48)			19
Total	$	(247)		(1.5)	%		$	170		1.0	%		$	(422)		$	5
(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 29, 2023
(UNAUDITED)
					Adjustments
					Acquisition-			Restructuring
					Related			and Other						Adjusted
	U.S. GAAP				Charges (1)			Charges, Net (1)			Tax Items (2)			(Non-GAAP) (3)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	411			$	1		$	32		$	—		$	444
Industrial Solutions		162				6			16			—			184
Communications Solutions		62				—			9			—			71
Total	$	635			$	7		$	57		$	—		$	699
Operating margin		15.7	%												17.3	%
Other expense, net	$	(3)			$	—		$	—		$	—		$	(3)
Income tax expense	$	(81)			$	(1)		$	(3)		$	(49)		$	(134)
Effective tax rate		12.8	%												19.2	%
Income from continuing operations	$	553			$	6		$	54		$	(49)		$	564
Diluted earnings per share from continuing operations	$	1.75			$	0.02		$	0.17		$	(0.16)		$	1.78
(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) Represents income tax benefits associated with a decrease in the valuation allowance for certain tax loss and credit carryforwards.
(3) 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 30, 2022
(UNAUDITED)
					Adjustments
					Acquisition-			Restructuring
					Related			and Other						Adjusted
	U.S. GAAP				Charges (1)			Charges, Net (1)			Tax Items (2)			(Non-GAAP) (3)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	347			$	4		$	56		$	—		$	407
Industrial Solutions		177				8			19			—			204
Communications Solutions		136				3			7			—			146
Total	$	660			$	15		$	82		$	—		$	757
Operating margin		15.1	%												17.4	%
Other income, net	$	4			$	—		$	—		$	—		$	4
Income tax (expense) benefit	$	56			$	(3)		$	(16)		$	(182)		$	(145)
Effective tax rate		(8.6)	%												19.4	%
Income from continuing operations	$	708			$	12		$	66		$	(182)		$	604
Diluted earnings per share from continuing operations	$	2.21			$	0.04		$	0.21		$	(0.57)		$	1.88
(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 a $67 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income.
(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 29, 2023
(UNAUDITED)
					Adjustments
					Acquisition-			Restructuring
					Related			and Other						Adjusted
	U.S. GAAP				Charges (1)			Charges, Net (1)			Tax Items (2)			(Non-GAAP) (3)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	1,451			$	3		$	211		$	—		$	1,665
Industrial Solutions		602				27			84			—			713
Communications Solutions		251				3			45			—			299
Total	$	2,304			$	33		$	340		$	—		$	2,677
Operating margin		14.4	%												16.7	%
Other expense, net	$	(16)			$	—		$	—		$	—		$	(16)
Income tax expense	$	(364)			$	(6)		$	(85)		$	(49)		$	(504)
Effective tax rate		16.0	%												19.1	%
Income from continuing operations	$	1,904			$	27		$	255		$	(49)		$	2,137
Diluted earnings per share from continuing operations	$	6.01			$	0.09		$	0.80		$	(0.15)		$	6.74
(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) Represents income tax benefits associated with a decrease in the valuation allowance for certain tax loss and credit carryforwards.
(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 30, 2022
(UNAUDITED)
					Adjustments
					Acquisition-			Restructuring
					Related			and Other						Adjusted
	U.S. GAAP				Charges (1)			Charges, Net (1)(2)			Tax Items (3)			(Non-GAAP) (4)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	1,534			$	16		$	68		$	—		$	1,618
Industrial Solutions		607				32			66			—			705
Communications Solutions		615				5			23			—			643
Total	$	2,756			$	53		$	157		$	—		$	2,966
Operating margin		16.9	%												18.2	%
Other income, net	$	28			$	—		$	—		$	(11)		$	17
Income tax expense	$	(306)			$	(11)		$	(34)		$	(200)		$	(551)
Effective tax rate		11.2	%												18.8	%
Income from continuing operations	$	2,427			$	42		$	123		$	(211)		$	2,381
Diluted earnings per share from continuing operations	$	7.47			$	0.13		$	0.38		$	(0.65)		$	7.33
(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 $141 million recorded in net restructuring and other charges and $16 million recorded in cost of sales.
(3) Includes a $124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. Also includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the terms of the purchase agreement.
(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 30, 2022
(UNAUDITED)
					Adjustments
					Acquisition-			Restructuring
					Related			and Other			Adjusted
	U.S. GAAP				Charges (1)			Charges, Net (1)			(Non-GAAP) (2)
	($ in millions, except per share data)
Operating income:
Transportation Solutions	$	282			$	2		$	74		$	358
Industrial Solutions		156				6			13			175
Communications Solutions		64				1			24			89
Total	$	502			$	9		$	111		$	622
Operating margin		13.1	%									16.2	%
Other expense, net	$	(5)			$	—		$	—		$	(5)
Income tax expense	$	(87)			$	(2)		$	(29)		$	(118)
Effective tax rate		17.9	%									19.5	%
Income from continuing operations	$	398			$	7		$	82		$	487
Diluted earnings per share from continuing operations	$	1.25			$	0.02		$	0.26		$	1.53
(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) See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)

Change in Net Sales for the Quarter Ended September 29, 2023 versus Net Sales for the Quarter Ended September 30, 2022

Change in Organic Net Sales for the Quarter Ended September 29, 2023 versus Organic Net Sales for the Quarter Ended September 30, 2022

For the Quarter Ended September 29, 2023

For the Quarter Ended September 30, 2022

Adjustment

Adjustment

Adjustment

14 Weeks

Impact of

13 Weeks

14 Weeks

Impact of

13 Weeks

14 Weeks

Impact of

13 Weeks

U.S. GAAP

14th Week

(Non-GAAP) (3)(4)

U.S. GAAP

14th Week

(Non-GAAP) (3)(4)

(Non-GAAP) (3)

14th Week

(Non-GAAP) (3)(4)

($ in millions)

Net sales

$

4,035

$

4,359

$

(306)

$

4,053

(7.4)

%

7.0

%

(0.4)

%

(8.6)

%

7.1

%

(1.5)

%

For the Quarter Ended September 30, 2022

Adjustments

Adjustment

Acquisition

Restructuring

14 Weeks

13 Weeks

Related

and Other

Adjusted

Impact of

Adjusted

U.S. GAAP

Charges (1)

Charges, Net (1)

Tax Items (2)

(Non-GAAP) (3)

14th Week

(Non-GAAP) (3)(4)

Diluted earnings per share from

continuing operations

$

2.21

$

0.04

$

0.21

$

(0.57)

$

1.88

$

(0.13)

$

1.75

(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 a $67 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income.

(3) See description of non-GAAP financial measures.

(4) Excludes the impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales and adjusted earnings per share for the fourth quarter of the fiscal year.

 

TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)

Change in Net Sales for Fiscal 2023

Change in Organic Net Sales for Fiscal 2023

Fiscal 2022

versus Net Sales for Fiscal 2022

versus Organic Net Sales for Fiscal 2022

Adjustment

Adjustment

Adjustment

53 Weeks

Impact of

52 Weeks

53 Weeks

Impact of

52 Weeks

53 Weeks

Impact of

52 Weeks

Fiscal 2023

U.S. GAAP

53rd Week

(Non-GAAP) (4)(5)

U.S. GAAP

53rd Week

(Non-GAAP) (4)(5)

(Non-GAAP) (4)

53rd Week

(Non-GAAP) (4)(5)

($ in millions)

Net sales

$

16,034

$

16,281

$

(306)

$

15,975

(1.5)

%

1.9

%

0.4

%

1.0

%

2.0

%

3.0

%

For the Year Ended September 30, 2022

Adjustments

Adjustment

Acquisition

Restructuring

53 Weeks

52 Weeks

Related

and Other

Adjusted

Impact of

Adjusted

U.S. GAAP

Charges (1)

Charges, Net (1)(2)

Tax Items (3)

(Non-GAAP) (4)

14th Week

(Non-GAAP) (4)(5)

Diluted earnings per share from

continuing operations

$

7.47

$

0.13

$

0.38

$

(0.65)

$

7.33

$

(0.13)

$

7.20

(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 $141 million recorded in net restructuring and other charges and $16 million recorded in cost of sales.

(3) Includes a $124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. Also includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the terms of the purchase agreement.

(4) See description of non-GAAP financial measures.

(5) Excludes the impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales and adjusted earnings per share for the fourth quarter of the fiscal year.

 

TE CONNECTIVITY LTD.
RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of November 1, 2023
(UNAUDITED)
	Outlook for
	Quarter Ending
	December 29,
	2023
Diluted earnings per share from continuing operations	$	1.59
Restructuring and other charges, net		0.10
Acquisition-related charges		0.01
Adjusted diluted earnings per share from continuing operations (1)	$	1.70
Net sales growth (decline)		0.2	%
Translation		(0.4)
(Acquisitions) divestitures, net		(0.3)
Organic net sales growth (1)		(0.5)	%
(1) See description of non-GAAP financial measures.

 

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SOURCE TE Connectivity, LTD

FAQ

What is the ticker symbol for TE Connectivity Ltd.?

The ticker symbol for TE Connectivity Ltd. is TEL.

What were the net sales for the fourth quarter?

The net sales for the fourth quarter were $4 billion, essentially flat on a reported basis and down 2% organically.

What were the GAAP diluted earnings per share from continuing operations for the fourth quarter?

The GAAP diluted earnings per share from continuing operations for the fourth quarter were $1.75, down 21% year over year.

What were the adjusted earnings per share for the fourth quarter?

The adjusted earnings per share for the fourth quarter were $1.78, an increase of 2% versus the prior year on a 13-week comparison basis.

What were the net sales for the full year?

The net sales for the full year were $16 billion, essentially flat on a reported basis and up 3% organically.

What were the GAAP earnings per share from continuing operations for the full year?

The GAAP earnings per share from continuing operations for the full year were $6.01, down 20% year over year.

What were the adjusted earnings per share for the full year?

The adjusted earnings per share for the full year were $6.74, down 6% versus the prior year on a 52-week comparison basis.

What was the cash flow from operating activities for the quarter?

The cash flow from operating activities for the quarter was $1.1 billion, a quarterly record.

What was the free cash flow for the quarter?

The free cash flow for the quarter was $945 million, a quarterly record.

What was the cash flow from operating activities for the full year?

The cash flow from operating activities for the full year was $3.1 billion, a company record.

What was the free cash flow for the full year?

The free cash flow for the full year was $2.4 billion, a company record.

What is the outlook for the first quarter of fiscal 2024?

For the first quarter of fiscal 2024, the company expects net sales of approximately $3.85 billion, with strong margin expansion.