TE Connectivity announces third quarter results for fiscal year 2022

Rhea-AI Summary

TE Connectivity Ltd. reported impressive fiscal Q3 2022 earnings, with net sales of $4.1 billion, up 7% year-over-year. Organic growth reached 11%, led by strong performance across all segments. The company received orders totaling $4.2 billion, resulting in a book-to-bill ratio of 1.02. GAAP EPS from continuing operations increased by 5% to $1.83, while adjusted EPS rose 4% to $1.86. For Q4 FY22, TE expects net sales of approximately $4.2 billion but anticipates a 25% decline in GAAP EPS year-over-year.

Positive

• Net sales increased by 7% to $4.1 billion.
• Organic growth of 11% year-over-year.
• GAAP EPS from continuing operations rose by 5% to $1.83.
• Strong order book with a book-to-bill ratio of 1.02.
• Backlog increased over 20% year-over-year.

Negative

• Projected GAAP EPS for Q4 FY22 expected to decline by 25% year-over-year.

EPS growth and record sales above expectations, with growth across all segments

SCHAFFHAUSEN, Switzerland, July 27, 2022 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal third quarter ended June 24, 2022.

Third Quarter Highlights

• Net sales were $4.1 billion, up 7% on a reported basis and 11% organically year over year, with strong growth across all segments.
• Orders of $4.2 billion with a book to bill of 1.02 and backlog up more than 20% year over year, reflecting continued strong customer demand.
• GAAP diluted earnings per share (EPS) from continuing operations were $1.83, up 5% year over year, and adjusted EPS were $1.86, up 4% year over year.
• Cash flow from operating activities was $579 million, with approximately $500 million returned to shareholders.
• Issued Connecting Our World Report, which highlights 30% reduction in absolute GHG emissions in fiscal year 2021 and other ESG achievements.

"I am pleased with our record third quarter performance and the strong execution by our global teams to once again deliver sales and EPS growth above expectations in what continues to be a dynamic macro environment," said TE Connectivity CEO Terrence Curtin. "We saw broad growth across all segments, with every one of our businesses growing organically, demonstrating the strength and strategic positioning of our portfolio as we consistently expand our leadership in long-term growth and sustainability trends including electric vehicles, cloud computing, factory automation and renewable energy. We continue to outperform the market – both through content growth and share gains – as our customers seek out our technology and solutions to enable an increasingly connected and electrified world. Our orders remain strong, and I am confident in our ability to continue navigating broader macro challenges to effectively serve our customers and secure design wins that will drive future growth."

Fourth Quarter FY22 Outlook
For the fourth quarter of fiscal 2022, the company expects net sales of approximately $4.2 billion, reflecting an approximate 10% increase on a reported basis and an approximate 15% increase on an organic basis year over year. GAAP EPS from continuing operations are expected to be approximately $1.79, down 25% year over year, with adjusted EPS of approximately $1.85, up 9% year over year. The outlook includes the impact of an extra week in the fourth quarter.

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 July 27, 2022. 

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. 24, 2021 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 Nine Months Ended
	June 24,			June 25,			June 24,			June 25,
	2022			2021			2022			2021
	(in millions, except per share data)
Net sales	$	4,097		$	3,845		$	11,922		$	11,105
Cost of sales		2,769			2,577			8,027			7,481
Gross margin		1,328			1,268			3,895			3,624
Selling, general, and administrative expenses		393			366			1,172			1,128
Research, development, and engineering expenses		179			168			539			504
Acquisition and integration costs		11			9			29			23
Restructuring and other charges, net		26			11			59			195
Operating income		719			714			2,096			1,774
Interest income		3			3			9			14
Interest expense		(18)			(14)			(48)			(42)
Other income, net		4			2			24			5
Income from continuing operations before income taxes		708			705			2,081			1,751
Income tax expense		(116)			(124)			(362)			(290)
Income from continuing operations		592			581			1,719			1,461
Income (loss) from discontinued operations, net of income taxes		2			(1)			1			6
Net income	$	594		$	580		$	1,720		$	1,467
Basic earnings per share:
Income from continuing operations	$	1.84		$	1.76		$	5.31		$	4.41
Income from discontinued operations		0.01			—			—			0.02
Net income		1.84			1.76			5.31			4.43
Diluted earnings per share:
Income from continuing operations	$	1.83		$	1.74		$	5.26		$	4.39
Income from discontinued operations		0.01			—			—			0.02
Net income		1.83			1.74			5.26			4.41
Weighted-average number of shares outstanding:
Basic		322			330			324			331
Diluted		324			333			327			333

 

 

 

TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	June 24,			September 24,
	2022			2021
	(in millions, except share data)
Assets
Current assets:
Cash and cash equivalents	$	820		$	1,203
Accounts receivable, net of allowance for doubtful accounts of $54 and $41, respectively		3,132			2,928
Inventories		3,028			2,511
Prepaid expenses and other current assets		603			621
Total current assets		7,583			7,263
Property, plant, and equipment, net		3,712			3,778
Goodwill		5,352			5,590
Intangible assets, net		1,355			1,549
Deferred income taxes		2,478			2,499
Other assets		868			783
Total assets	$	21,348		$	21,462
Liabilities, redeemable noncontrolling interests, and shareholders' equity
Current liabilities:
Short-term debt	$	822		$	503
Accounts payable		1,917			1,911
Accrued and other current liabilities		2,319			2,242
Total current liabilities		5,058			4,656
Long-term debt		3,380			3,589
Long-term pension and postretirement liabilities		1,094			1,139
Deferred income taxes		186			181
Income taxes		322			302
Other liabilities		771			847
Total liabilities		10,811			10,714
Commitments and contingencies
Redeemable noncontrolling interests		103			114
Shareholders' equity:
Common shares, CHF 0.57 par value, 330,830,781 shares authorized and issued, and 336,099,881 shares authorized and issued, respectively		146			148
Accumulated earnings		12,084			11,709
Treasury shares, at cost, 10,425,219 and 9,060,919 shares, respectively		(1,370)			(1,055)
Accumulated other comprehensive loss		(426)			(168)
Total shareholders' equity		10,434			10,634
Total liabilities, redeemable noncontrolling interests, and shareholders' equity	$	21,348		$	21,462

 

 

 

TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	For the Quarters Ended						For the Nine Months Ended
	June 24,			June 25,			June 24,			June 25,
	2022			2021			2022			2021
	(in millions)
Cash flows from operating activities:
Net income	$	594		$	580		$	1,720		$	1,467
(Income) loss from discontinued operations, net of income taxes		(2)			1			(1)			(6)
Income from continuing operations		592			581			1,719			1,461
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		205			210			597			590
Deferred income taxes		(60)			(14)			(18)			(62)
Non-cash lease cost		34			31			98			90
Provision for losses on accounts receivable and inventories		11			10			79			32
Share-based compensation expense		28			24			88			73
Other		(23)			(25)			(19)			(45)
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable, net		(51)			(71)			(108)			(638)
Inventories		(28)			(270)			(439)			(482)
Prepaid expenses and other current assets		21			16			57			(14)
Accounts payable		(63)			136			(48)			646
Accrued and other current liabilities		(11)			(15)			(316)			110
Income taxes		26			27			53			61
Other		(102)			42			(219)			80
Net cash provided by operating activities		579			682			1,524			1,902
Cash flows from investing activities:
Capital expenditures		(205)			(170)			(556)			(454)
Proceeds from sale of property, plant, and equipment		35			27			98			85
Acquisition of businesses, net of cash acquired		(14)			(19)			(116)			(126)
Other		(1)			(12)			6			(2)
Net cash used in investing activities		(185)			(174)			(568)			(497)
Cash flows from financing activities:
Net increase in commercial paper		237			—			237			—
Proceeds from issuance of debt		—			—			588			661
Repayment of debt		—			(426)			(558)			(706)
Proceeds from exercise of share options		4			11			34			130
Repurchase of common shares		(378)			(259)			(1,086)			(518)
Payment of common share dividends to shareholders		(180)			(165)			(506)			(483)
Other		(1)			(3)			(39)			(27)
Net cash used in financing activities		(318)			(842)			(1,330)			(943)
Effect of currency translation on cash		(5)			2			(9)			9
Net increase (decrease) in cash, cash equivalents, and restricted cash		71			(332)			(383)			471
Cash, cash equivalents, and restricted cash at beginning of period		749			1,748			1,203			945
Cash, cash equivalents, and restricted cash at end of period	$	820		$	1,416		$	820		$	1,416
Supplemental cash flow information:
Interest paid on debt, net	$	10		$	7		$	39		$	40
Income taxes paid, net of refunds		149			110			326			291

 

 

 

TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
	For the Quarters Ended						For the Nine Months Ended
	June 24,			June 25,			June 24,			June 25,
	2022			2021			2022			2021
	(in millions)
Net cash provided by operating activities	$	579		$	682		$	1,524		$	1,902
Excluding:
Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts		14			—			(28)			12
Capital expenditures, net		(170)			(143)			(458)			(369)
Free cash flow (1)	$	423		$	539		$	1,038		$	1,545
(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 Nine Months Ended
	June 24,						June 25,						June 24,						June 25,
	2022						2021						2022						2021
	($ in millions)
	Net Sales						Net Sales						Net Sales						Net Sales
Transportation Solutions	$	2,300					$	2,265					$	6,772					$	6,776
Industrial Solutions		1,134						1,002						3,268						2,827
Communications Solutions		663						578						1,882						1,502
Total	$	4,097					$	3,845					$	11,922					$	11,105
	Operating			Operating			Operating			Operating			Operating			Operating			Operating			Operating
	Income			Margin			Income			Margin			Income			Margin			Income			Margin
Transportation Solutions	$	383		16.7	%		$	433		19.1	%		$	1,187		17.5	%		$	1,139		16.8	%
Industrial Solutions		169		14.9				148		14.8				440		13.5				335		11.9
Communications Solutions		167		25.2				133		23.0				469		24.9				300		20.0
Total	$	719		17.5	%		$	714		18.6	%		$	2,096		17.6	%		$	1,774		16.0	%
	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	$	397		17.3	%		$	440		19.4	%		$	1,211		17.9	%		$	1,284		18.9	%
Industrial Solutions		190		16.8				158		15.8				511		15.6				395		14.0
Communications Solutions		174		26.2				136		23.5				487		25.9				316		21.0
Total	$	761		18.6	%		$	734		19.1	%		$	2,209		18.5	%		$	1,995		18.0	%
(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 June 24, 2022
	versus Net Sales for the Quarter Ended June 25, 2021
	Net Sales						Organic Net Sales									Acquisitions/
	Growth (Decline)						Growth (1)						Translation (2)			(Divestiture)
	($ in millions)
Transportation Solutions (3):
Automotive	$	29		1.8	%		$	148		9.1	%		$	(119)		$	—
Commercial transportation		18		4.7				38		9.8				(20)			—
Sensors		(12)		(4.2)				6		1.5				(18)			—
Total		35		1.5				192		8.3				(157)			—
Industrial Solutions (3):
Industrial equipment		102		27.1				71		19.1				(30)			61
Aerospace, defense, oil, and gas		11		4.2				22		8.7				(10)			(1)
Energy		20		10.7				31		16.7				(11)			—
Medical		(1)		(0.6)				1		0.6				(2)			—
Total		132		13.2				125		12.7				(53)			60
Communications Solutions (3):
Data and devices		88		26.7				86		26.2				(11)			13
Appliances		(3)		(1.2)				6		2.2				(9)			—
Total		85		14.7				92		15.9				(20)			13
Total	$	252		6.6	%		$	409		10.6	%		$	(230)		$	73
	Change in Net Sales for the Nine Months Ended June 24, 2022
	versus Net Sales for the Nine Months Ended June 25, 2021
	Net Sales						Organic Net Sales									Acquisitions/
	Growth (Decline)						Growth (1)						Translation (2)			(Divestitures)
	($ in millions)
Transportation Solutions (3):
Automotive	$	(57)		(1.2)	%		$	137		2.7	%		$	(194)		$	—
Commercial transportation		64		5.8				95		8.6				(31)			—
Sensors		(11)		(1.3)				19		2.2				(30)			—
Total		(4)		(0.1)				251		3.7				(255)			—
Industrial Solutions (3):
Industrial equipment		402		39.8				283		27.9				(55)			174
Aerospace, defense, oil, and gas		(3)		(0.4)				16		2.0				(18)			(1)
Energy		35		6.4				69		12.7				(23)			(11)
Medical		7		1.4				12		2.2				(5)			—
Total		441		15.6				380		13.5				(101)			162
Communications Solutions (3):
Data and devices		310		36.9				295		35.0				(16)			31
Appliances		70		10.6				83		12.4				(13)			—
Total		380		25.3				378		25.1				(29)			31
Total	$	817		7.4	%		$	1,009		9.0	%		$	(385)		$	193
(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 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		169				6			15			—			190
Communications Solutions		167				1			6			—			174
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. Our estimated annual effective tax rate for fiscal 2022 includes a total income tax benefit of approximately $75 million related to this transaction, with portions recognized in the quarters ended December 24, 2021, March 25, 2022, and June 24, 2022 and the remainder to be recognized in the quarter ending September 30, 2022.
(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 25, 2021
(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	$	433			$	5		$	2		$	440
Industrial Solutions		148				4			6			158
Communications Solutions		133				—			3			136
Total	$	714			$	9		$	11		$	734
Operating margin		18.6	%									19.1	%
Other income, net	$	2			$	—		$	—		$	2
Income tax expense	$	(124)			$	(2)		$	(4)		$	(130)
Effective tax rate		17.6	%									17.9	%
Income from continuing operations	$	581			$	7		$	7		$	595
Diluted earnings per share from continuing operations	$	1.74			$	0.02		$	0.02		$	1.79
(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 Nine Months 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	$	1,187			$	12		$	12		$	—		$	1,211
Industrial Solutions		440				24			47			—			511
Communications Solutions		469				2			16			—			487
Total	$	2,096			$	38		$	75		$	—		$	2,209
Operating margin		17.6	%												18.5	%
Other income, net	$	24			$	—		$	—		$	(11)		$	13
Income tax expense	$	(362)			$	(8)		$	(18)		$	(18)		$	(406)
Effective tax rate		17.4	%												18.6	%
Income from continuing operations	$	1,719			$	30		$	57		$	(29)		$	1,777
Diluted earnings per share from continuing operations	$	5.26			$	0.09		$	0.17		$	(0.09)		$	5.43
(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 $59 million recorded in net restructuring and other charges and $16 million recorded in cost of sales.
(3) Includes a $57 million income tax benefit related to the tax impacts of an intercompany transaction. Our estimated annual effective tax rate for fiscal 2022 includes a total income tax benefit of approximately $75 million related to this transaction, with portions recognized in the quarters ended December 24, 2021, March 25, 2022, and June 24, 2022 and the remainder to be recognized in the quarter ending September 30, 2022. 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 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 Nine Months Ended June 25, 2021
(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	$	1,139			$	15		$	130		$	—		$	1,284
Industrial Solutions		335				11			49			—			395
Communications Solutions		300				—			16			—			316
Total	$	1,774			$	26		$	195		$	—		$	1,995
Operating margin		16.0	%												18.0	%
Other income, net	$	5			$	—		$	—		$	—		$	5
Income tax expense	$	(290)			$	(6)		$	(38)		$	(29)		$	(363)
Effective tax rate		16.6	%												18.4	%
Income from continuing operations	$	1,461			$	20		$	157		$	(29)		$	1,609
Diluted earnings per share from continuing operations	$	4.39			$	0.06		$	0.47		$	(0.09)		$	4.83
(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) 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 24, 2021
(UNAUDITED)
					Adjustments
					Acquisition-			Restructuring
					Related			and Other									Adjusted
	U.S. GAAP				Charges (1)			Charges, Net (1)			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 Year Ended September 24, 2021
(UNAUDITED)
					Adjustments
					Acquisition-			Restructuring
					Related			and Other									Adjusted
	U.S. GAAP				Charges (1)			Charges, Net (1)			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 FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of July 27, 2022
(UNAUDITED)
	Outlook for
	Quarter Ending
	September 30,
	2022
Diluted earnings per share from continuing operations	$	1.79
Restructuring and other charges, net		0.16
Acquisition-related charges		0.03
Tax items		(0.13)
Adjusted diluted earnings per share from continuing operations (1)	$	1.85
		.
Net sales growth		10.0	%
Translation		7.0
(Acquisitions) divestitures, net		(2.3)
Organic net sales growth (1)		14.7	%
(1) See description of non-GAAP financial measures.

 

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SOURCE TE Connectivity Ltd.

FAQ

What were TE Connectivity's net sales for Q3 FY22?

TE Connectivity reported net sales of $4.1 billion for Q3 FY22, which is a 7% increase year-over-year.

What is the EPS forecast for TE Connectivity in Q4 FY22?

TE Connectivity expects GAAP EPS of approximately $1.79 for Q4 FY22, which represents a 25% decline year-over-year.

How did TE Connectivity perform in terms of organic growth in Q3 FY22?

TE Connectivity achieved an organic growth rate of 11% year-over-year in Q3 FY22.

What was the book-to-bill ratio reported by TE Connectivity?

TE Connectivity reported a book-to-bill ratio of 1.02 for the quarter.