TE Connectivity announces second quarter results for fiscal year 2023

Rhea-AI Summary

TE Connectivity Ltd. (NYSE: TEL) reported strong fiscal second-quarter results for the period ending March 31, 2023, with net sales of $4.16 billion, reflecting a 4% increase from the previous year, and an 8% organic growth. The Transportation Solutions segment saw a remarkable 12% organic growth, while the Industrial Solutions segment grew by 15%, despite a 20% decline in the Communications Solutions segment. GAAP diluted earnings per share (EPS) were $1.34, with adjusted EPS exceeding expectations at $1.65. Currency fluctuations negatively impacted sales by $155 million. The company generated strong cash flow of approximately $635 million and returned $375 million to shareholders. Looking ahead, TE Connectivity anticipates third-quarter net sales of around $4.0 billion and expects GAAP EPS of approximately $1.56.

Positive

• Net sales increased 4% year-over-year to $4.16 billion.
• Organic growth of 12% in the Transportation Solutions segment.
• Organic growth of 15% in the Industrial Solutions segment.
• Adjusted EPS exceeded guidance at $1.65.
• Strong cash flow from operating activities of approximately $635 million.
• Returned approximately $375 million to shareholders.

Negative

• Communications Solutions segment experienced a 20% decline.
• Currency exchange negatively impacted sales by $155 million.

Sales above guidance driven by strong year-over-year growth in Transportation and Industrial segments

SCHAFFHAUSEN, Switzerland, April 26, 2023 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal second quarter ended March 31, 2023.

Second Quarter Highlights

• Net sales were $4.16 billion, up 4% on a reported basis and 8% organically year over year.
• Organic growth of 12% in the Transportation Solutions segment and 15% in the Industrial Solutions segment was partially offset by an expected decline of 20% in the Communications Solutions segment
• Currency exchange negatively impacted sales by $155 million.
• GAAP diluted earnings per share (EPS) from continuing operations were $1.34, and adjusted EPS exceeded guidance at $1.65.
• GAAP and adjusted EPS impacted by $0.17 of currency and tax headwinds year over year
• Order levels were up sequentially to $4 billion.
• Strong cash flow from operating activities of approximately $635 million and free cash flow of approximately $445 million, with approximately $375 million returned to shareholders
• Company named one of Fortune's World's Most Admired Companies for sixth consecutive year

"We delivered sales and earnings ahead of expectations and generated very strong cash flow during the quarter in what remains a dynamic macro environment. This performance was due to the ongoing strong execution of our global teams and the strategic positioning of our portfolio," said TE Connectivity CEO Terrence Curtin. "In our Transportation and Industrial segments, we drove organic growth across all businesses and continue to see solid demand patterns in those segments. In particular, our Automotive business continues to outperform a flat auto market due to our leading global position in electric vehicles as our customers seek out our technology to enable an increasingly electrified world. In our Industrial segment, our Medical business delivered record quarterly sales and we are continuing to capitalize on growth momentum in renewable energy applications. While our Communications segment was impacted by weaker end markets and supply chain corrections as expected, our teams are securing design wins in data center and artificial intelligence applications that will drive future growth as those markets recover.

"We continue to expect margin expansion at the company level in the second half of the year, driven by further margin improvement in our Transportation segment, as we continue to take actions to navigate market dynamics. We remain confident that we are well positioned for long-term growth and profitability."

Third Quarter FY23 Outlook

For the third quarter of fiscal 2023, the company expects net sales of approximately $4.0 billion. GAAP EPS from continuing operations are expected to be approximately $1.56, with adjusted EPS of approximately $1.65.

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 April 26, 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.
• 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.

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, 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. 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 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 Six Months Ended
	March 31,			March 25,			March 31,			March 25,
	2023			2022			2023			2022
	(in millions, except per share data)
Net sales	$	4,160		$	4,007		$	8,001		$	7,825
Cost of sales		2,876			2,670			5,530			5,258
Gross margin		1,284			1,337			2,471			2,567
Selling, general, and administrative expenses		435			416			827			779
Research, development, and engineering expenses		185			185			358			360
Acquisition and integration costs		8			10			17			18
Restructuring and other charges, net		119			21			230			33
Operating income		537			705			1,039			1,377
Interest income		12			4			21			6
Interest expense		(20)			(18)			(41)			(30)
Other income (expense), net		(4)			5			(9)			20
Income from continuing operations before income taxes		525			696			1,010			1,373
Income tax expense		(100)			(136)			(187)			(246)
Income from continuing operations		425			560			823			1,127
Income (loss) from discontinued operations, net of income taxes		8			—			7			(1)
Net income	$	433		$	560		$	830		$	1,126
Basic earnings per share:
Income from continuing operations	$	1.34		$	1.72		$	2.60		$	3.46
Income (loss) from discontinued operations		0.03			—			0.02			—
Net income		1.37			1.72			2.62			3.45
Diluted earnings per share:
Income from continuing operations	$	1.34		$	1.71		$	2.58		$	3.44
Income (loss) from discontinued operations		0.03			—			0.02			—
Net income		1.36			1.71			2.60			3.43
Weighted-average number of shares outstanding:
Basic		316			325			317			326
Diluted		318			327			319			328

 

TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	March 31,			September 30,
	2023			2022
	(in millions, except share data)
Assets
Current assets:
Cash and cash equivalents	$	905		$	1,088
Accounts receivable, net of allowance for doubtful accounts of $46 and $45, respectively		3,048			2,865
Inventories		2,811			2,676
Prepaid expenses and other current assets		675			639
Total current assets		7,439			7,268
Property, plant, and equipment, net		3,818			3,567
Goodwill		5,527			5,258
Intangible assets, net		1,286			1,288
Deferred income taxes		2,634			2,498
Other assets		786			903
Total assets	$	21,490		$	20,782
Liabilities, redeemable noncontrolling interests, and shareholders' equity
Current liabilities:
Short-term debt	$	286		$	914
Accounts payable		1,678			1,593
Accrued and other current liabilities		2,429			2,125
Total current liabilities		4,393			4,632
Long-term debt		3,916			3,292
Long-term pension and postretirement liabilities		731			695
Deferred income taxes		216			244
Income taxes		326			304
Other liabilities		782			718
Total liabilities		10,364			9,885
Commitments and contingencies
Redeemable noncontrolling interests		106			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		11,824			12,832
Treasury shares, at cost, 7,053,036 and 12,749,540 shares, respectively		(933)			(1,681)
Accumulated other comprehensive loss		(13)			(495)
Total shareholders' equity		11,020			10,802
Total liabilities, redeemable noncontrolling interests, and shareholders' equity	$	21,490		$	20,782

 

TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	For the Quarters Ended						For the Six Months Ended
	March 31,			March 25,			March 31,			March 25,
	2023			2022			2023			2022
	(in millions)
Cash flows from operating activities:
Net income	$	433		$	560		$	830		$	1,126
(Income) loss from discontinued operations, net of income taxes		(8)			—			(7)			1
Income from continuing operations		425			560			823			1,127
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		207			194			394			392
Deferred income taxes		(35)			38			(70)			42
Non-cash lease cost		36			33			70			64
Provision for losses on accounts receivable and inventories		18			35			69			68
Share-based compensation expense		31			28			63			60
Impairment of held for sale businesses		61			—			67			—
Other		25			13			68			4
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable, net		(170)			(205)			(224)			(57)
Inventories		51			(147)			(273)			(411)
Prepaid expenses and other current assets		61			(16)			(25)			36
Accounts payable		(45)			—			104			15
Accrued and other current liabilities		(44)			(20)			(83)			(305)
Income taxes		10			(7)			35			27
Other		3			(93)			197			(117)
Net cash provided by operating activities		634			413			1,215			945
Cash flows from investing activities:
Capital expenditures		(189)			(179)			(372)			(351)
Proceeds from sale of property, plant, and equipment		1			9			2			63
Acquisition of businesses, net of cash acquired		1			(2)			(108)			(102)
Proceeds from divestiture of businesses, net of cash retained by businesses sold		51			—			51			16
Other		(3)			(12)			23			(9)
Net cash used in investing activities		(139)			(184)			(404)			(383)
Cash flows from financing activities:
Net increase (decrease) in commercial paper		54			(479)			(85)			—
Proceeds from issuance of debt		499			588			499			588
Repayment of debt		(587)			(3)			(591)			(558)
Proceeds from exercise of share options		9			8			20			30
Repurchase of common shares		(179)			(404)			(466)			(708)
Payment of common share dividends to shareholders		(177)			(163)			(355)			(326)
Other		(4)			(7)			(28)			(38)
Net cash used in financing activities		(385)			(460)			(1,006)			(1,012)
Effect of currency translation on cash		2			(2)			12			(4)
Net increase (decrease) in cash, cash equivalents, and restricted cash		112			(233)			(183)			(454)
Cash, cash equivalents, and restricted cash at beginning of period		793			982			1,088			1,203
Cash, cash equivalents, and restricted cash at end of period	$	905		$	749		$	905		$	749
Supplemental cash flow information:
Interest paid on debt, net	$	27		$	17		$	39		$	29
Income taxes paid, net of refunds		125			106			223			177

 

TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
	For the Quarters Ended						For the Six Months Ended
	March 31,			March 25,			March 31,			March 25,
	2023			2022			2023			2022
	(in millions)
Net cash provided by operating activities	$	634		$	413		$	1,215		$	945
Excluding:
Cash collected pursuant to collateral requirements related to cross-currency swap contracts		—			(1)			—			(42)
Capital expenditures, net		(188)			(170)			(370)			(288)
Free cash flow (1)	$	446		$	242		$	845		$	615
(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 Six Months Ended
	March 31,						March 25,						March 31,						March 25,
	2023						2022						2023						2022
	($ in millions)
	Net Sales						Net Sales						Net Sales						Net Sales
Transportation Solutions	$	2,483					$	2,314					$	4,742					$	4,472
Industrial Solutions		1,191						1,068						2,251						2,120
Communications Solutions		486						625						1,008						1,233
Total	$	4,160					$	4,007					$	8,001					$	7,825
	Operating			Operating			Operating			Operating			Operating			Operating			Operating			Operating
	Income			Margin			Income			Margin			Income			Margin			Income			Margin
Transportation Solutions	$	333		13.4	%		$	409		17.7	%		$	615		13.0	%		$	804		18.0	%
Industrial Solutions		134		11.3				145		13.6				290		12.9				265		12.5
Communications Solutions		70		14.4				151		24.2				134		13.3				308		25.0
Total	$	537		12.9	%		$	705		17.6	%		$	1,039		13.0	%		$	1,377		17.6	%
	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	$	411		16.6	%		$	422		18.2	%		$	769		16.2	%		$	814		18.2	%
Industrial Solutions		174		14.6				161		15.1				349		15.5				315		14.9
Communications Solutions		79		16.3				153		24.5				168		16.7				319		25.9
Total	$	664		16.0	%		$	736		18.4	%		$	1,286		16.1	%		$	1,448		18.5	%
(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 March 31, 2023
	versus Net Sales for the Quarter Ended March 25, 2022
	Net Sales						Organic Net Sales									Acquisitions/
	Growth (Decline)						Growth (Decline) (1)						Translation (2)			(Divestiture)
	($ in millions)
Transportation Solutions (3):
Automotive	$	142		8.6	%		$	226		13.6	%		$	(84)		$	—
Commercial transportation		11		2.8				26		6.5				(15)			—
Sensors		16		6.0				23		8.8				(7)			—
Total		169		7.3				275		11.9				(106)			—
Industrial Solutions (3):
Industrial equipment		(4)		(0.9)				15		3.2				(19)			—
Aerospace, defense, and marine		37		14.2				48		18.6				(5)			(6)
Energy		49		26.6				51		27.7				(7)			5
Medical		41		25.9				42		26.3				(1)			—
Total		123		11.5				156		14.6				(32)			(1)
Communications Solutions (3):
Data and devices		(104)		(26.5)				(97)		(24.9)				(11)			4
Appliances		(35)		(15.0)				(29)		(12.4)				(6)			—
Total		(139)		(22.2)				(126)		(20.2)				(17)			4
Total	$	153		3.8	%		$	305		7.6	%		$	(155)		$	3

 

	Change in Net Sales for the Six Months Ended March 31, 2023
	versus Net Sales for the Six Months Ended March 25, 2022
	Net Sales						Organic Net Sales									Acquisitions/
	Growth (Decline)						Growth (Decline) (1)						Translation (2)			(Divestiture)
	($ in millions)
Transportation Solutions (3):
Automotive	$	271		8.5	%		$	508		16.0	%		$	(237)		$	—
Commercial transportation		(6)		(0.8)				33		4.4				(39)			—
Sensors		5		0.9				30		5.6				(25)			—
Total		270		6.0				571		12.8				(301)			—
Industrial Solutions (3):
Industrial equipment		(25)		(2.7)				29		3.2				(54)			—
Aerospace, defense, and marine		59		11.7				83		16.3				(18)			(6)
Energy		50		13.4				66		17.6				(21)			5
Medical		47		14.5				49		15.2				(2)			—
Total		131		6.2				227		10.7				(95)			(1)
Communications Solutions (3):
Data and devices		(131)		(17.5)				(120)		(15.9)				(24)			13
Appliances		(94)		(19.4)				(74)		(15.3)				(20)			—
Total		(225)		(18.2)				(194)		(15.7)				(44)			13
Total	$	176		2.2	%		$	604		7.7	%		$	(440)		$	12

(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 March 31, 2023
(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	$	333			$	—		$	78		$	411
Industrial Solutions		134				7			33			174
Communications Solutions		70				1			8			79
Total	$	537			$	8		$	119		$	664
Operating margin		12.9	%									16.0	%
Other expense, net	$	(4)			$	—		$	—		$	(4)
Income tax expense	$	(100)			$	(1)		$	(26)		$	(127)
Effective tax rate		19.0	%									19.5	%
Income from continuing operations	$	425			$	7		$	93		$	525
Diluted earnings per share from continuing operations	$	1.34			$	0.02		$	0.29		$	1.65
(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.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended March 25, 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	$	409			$	4		$	9		$	—		$	422
Industrial Solutions		145				6			10			—			161
Communications Solutions		151				—			2			—			153
Total	$	705			$	10		$	21		$	—		$	736
Operating margin		17.6	%												18.4	%
Other income, net	$	5			$	—		$	—		$	—		$	5
Income tax expense	$	(136)			$	(2)		$	(5)		$	8		$	(135)
Effective tax rate		19.5	%												18.6	%
Income from continuing operations	$	560			$	8		$	16		$	8		$	592
Diluted earnings per share from continuing operations	$	1.71			$	0.02		$	0.05		$	0.02		$	1.81

(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 $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 on December 27, 2021 and a $19 million income tax benefit related to the tax impacts of an intercompany transaction.

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

 

TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Six Months Ended March 31, 2023
(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	$	615			$	2		$	152		$	769
Industrial Solutions		290				13			46			349
Communications Solutions		134				2			32			168
Total	$	1,039			$	17		$	230		$	1,286
Operating margin		13.0	%									16.1	%
Other expense, net	$	(9)			$	—		$	—		$	(9)
Income tax expense	$	(187)			$	(3)		$	(55)		$	(245)
Effective tax rate		18.5	%									19.5	%
Income from continuing operations	$	823			$	14		$	175		$	1,012
Diluted earnings per share from continuing operations	$	2.58			$	0.04		$	0.55		$	3.17
(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.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Six Months Ended March 25, 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	$	804			$	7		$	3		$	—		$	814
Industrial Solutions		265				18			32			—			315
Communications Solutions		308				1			10			—			319
Total	$	1,377			$	26		$	45		$	—		$	1,448
Operating margin		17.6	%												18.5	%
Other income, net	$	20			$	—		$	—		$	(11)		$	9
Income tax expense	$	(246)			$	(5)		$	(12)		$	3		$	(260)
Effective tax rate		17.9	%												18.1	%
Income from continuing operations	$	1,127			$	21		$	33		$	(8)		$	1,173
Diluted earnings per share from continuing operations	$	3.44			$	0.06		$	0.10		$	(0.02)		$	3.58

(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 $33 million recorded in net restructuring and other charges and $12 million recorded in cost of sales.

(3) Includes a $36 million income tax benefit related to the tax impacts of an intercompany transaction, $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower 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 indemnification 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 June 24, 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	$	383			$	5		$	9		$	—		$	397
Industrial Solutions		165				6			15			—			186
Communications Solutions		171				1			6			—			178
Total	$	719			$	12		$	30		$	—		$	761
Operating margin		17.5	%												18.6	%
Other income, net	$	4			$	—		$	—		$	—		$	4
Income tax expense	$	(116)			$	(3)		$	(6)		$	(21)		$	(146)
Effective tax rate		16.4	%												19.5	%
Income from continuing operations	$	592			$	9		$	24		$	(21)		$	604
Diluted earnings per share from continuing operations	$	1.83			$	0.03		$	0.07		$	(0.06)		$	1.86
(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 $26 million recorded in net restructuring and other charges and $4 million recorded in cost of sales.
(3) Includes a $21 million income tax benefit related to 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 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 FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of April 26, 2023
(UNAUDITED)
	Outlook for
	Quarter Ending
	June 30,
	2023
Diluted earnings per share from continuing operations	$	1.56
Restructuring and other charges, net		0.07
Acquisition-related charges		0.02
Adjusted diluted earnings per share from continuing operations (1)	$	1.65
Net sales growth (decline)		(2.4)	%
Translation		0.4
Organic net sales growth (decline) (1)		(2.0)	%
(1) See description of non-GAAP financial measures.

 

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SOURCE TE Connectivity Ltd.

FAQ

What are the fiscal second-quarter results for TEL for 2023?

In the fiscal second quarter ended March 31, 2023, TEL reported net sales of $4.16 billion, with a 4% increase year-over-year.

What is the adjusted EPS guidance for TEL in Q3 FY23?

For the third quarter of fiscal 2023, TEL expects adjusted EPS of approximately $1.65.

How did the Transportation and Industrial segments perform for TEL?

The Transportation Solutions segment experienced 12% organic growth, while the Industrial Solutions segment grew by 15%.

What was the impact of currency fluctuations on TEL's sales?

Currency exchange negatively impacted TEL's sales by $155 million.

What are TEL's expected net sales for Q3 FY23?

TEL anticipates net sales of approximately $4.0 billion for the third quarter of fiscal 2023.