8-K
TE Connectivity plc (TEL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 2023
TE CONNECTIVITY LTD.
(Exact name of registrant as specified in its charter)
| | | |
|---|---|---|
| Switzerland | | 98-0518048 |
| (Jurisdiction of Incorporation) | | (IRS Employer Identification Number) |
001-33260
(Commission File Number)
Mühlenstrasse 26 , CH-8200 **** Schaffhausen
Switzerland
(Address of Principal Executive Offices, including Zip Code)
+41 **** (0)52 **** 633 66 61
(Registrant’s telephone number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| | | | | |
|---|---|---|---|---|
| Title of each class | | Trading symbol | | Name of each exchange on which registered |
| Common Shares, Par Value CHF 0.57 | | TEL | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On July 26, 2023, TE Connectivity Ltd. (the “Company”) issued a press release reporting the Company’s third quarter results for fiscal 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated by reference in this Item 2.02.
Item 7.01. Regulation FD Disclosure
The Company will hold a conference call and webcast on July 26, 2023 (see information in the press release attached hereto as Exhibit 99.1 under “Conference Call and Webcast”). A copy of the slide materials to be discussed at the conference call and webcast is being furnished pursuant to Regulation FD as Exhibit 99.2 and is incorporated herein by reference, and the slide materials also can be accessed at the “Investors” section of the Company’s website (www.te.com).
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | **** | Description |
|---|---|---|
| 99.1 | Press release issued July 26, 2023 | |
| 99.2 | Presentation - TE Connectivity Q3 2023 Earnings Call (July 26, 2023) | |
| | | |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: July 26, 2023 | TE CONNECTIVITY LTD.<br><br><br><br> |
|---|---|
| By: /s/ Heath A. Mitts | |
| Name: Heath A. Mitts<br> | |
| Title: Executive Vice President and Chief Financial Officer |
Exhibit 99.1
NEWS RELEASE
te.com
TE Connectivity announces third quarter results for fiscal year 2023
EPS exceeds, sales in line with guidance; continuing strong cash generation
SCHAFFHAUSEN, Switzerland – July 26, 2023 – TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal third quarter ended June 30, 2023.
Third Quarter Highlights
| ● | Net sales were $4 billion, in line with guidance, with year-over-year growth in the Transportation and Industrial segments offsetting an expected decline in Communications. |
|---|---|
| ● | GAAP diluted earnings per share (EPS) from continuing operations were $1.67, and adjusted EPS were $1.77, both exceeding guidance. |
| --- | --- |
| ● | Order levels were $4 billion, reflecting stability across all segments. |
| --- | --- |
| ● | Cash flow from operating activities of $779 million and strong free cash flow of $614 million in the quarter, with approximately $1.2 billion returned to shareholders year to date |
| --- | --- |
| ● | Published Connecting Our World report, highlighting commitments to the Science Based Targets initiative |
| --- | --- |
“We delivered earnings above guidance, along with year-over-year sales growth in our Transportation and Industrial segments, as we continue to benefit from the strategic positioning of our portfolio around key growth and sustainability trends. Our leading global position in electric vehicles once again allowed us to deliver a strong performance in Transportation, and we continued to capitalize on growth momentum in renewable energy applications as well as ongoing market recovery in commercial air and medical in our Industrial segment,” said TE Connectivity CEO Terrence Curtin. “While our Communications segment declined as expected, we are excited about our increased design win momentum in AI applications, where our high-speed connectivity solutions will drive future growth.
“Our year-to-date free cash flow is up over 40 percent year over year, demonstrating our strong business model. We are delivering on our commitment to expand margins in the second half, reinforced by our third quarter performance and fourth quarter guidance. We remain confident that we are well positioned for long-term profitable growth, as our customers depend on our technology to advance important trends including e-mobility, renewable energy, factory automation and artificial intelligence.”
Fourth Quarter FY23 Outlook
For the fourth quarter of fiscal 2023, the company expects net sales of approximately $4 billion. GAAP EPS from continuing operations are expected to be approximately $1.63, with adjusted EPS of approximately $1.75.
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 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 July 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.
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| <br><br><br><br><br><br><br><br> | <br><br><br><br><br><br><br><br> | |
|---|---|---|
| Contacts: | Media Relations :<br><br>Rachel Quimby<br><br>TE Connectivity<br><br>610-893-9593<br><br>Rachel.Quimby@te.com | Investor Relations :<br><br>Sujal Shah<br><br>TE Connectivity<br><br>610-893-9790<br><br>Sujal.Shah@te.com |
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TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Nine Months Ended | ||||||||
| | June 30, | | June 24, | | June 30, | | June 24, | ||||
| | 2023 | 2022 | 2023 | **** | 2022 | ||||||
| | (in millions, except per share data) | ||||||||||
| Net sales | $ | 3,998 | | $ | 4,097 | | $ | 11,999 | | $ | 11,922 |
| Cost of sales | | 2,699 | | | 2,769 | | | 8,229 | | | 8,027 |
| Gross margin | | 1,299 | | | 1,328 | | | 3,770 | | | 3,895 |
| Selling, general, and administrative expenses | | 431 | | | 393 | | | 1,258 | | | 1,172 |
| Research, development, and engineering expenses | | 176 | | | 179 | | | 534 | | | 539 |
| Acquisition and integration costs | | 9 | | | 11 | | | 26 | | | 29 |
| Restructuring and other charges, net | | 53 | | | 26 | | | 283 | | | 59 |
| Operating income | | 630 | | | 719 | | | 1,669 | | | 2,096 |
| Interest income | | 18 | | | 3 | | | 39 | | | 9 |
| Interest expense | | (20) | | | (18) | | | (61) | | | (48) |
| Other income (expense), net | | (4) | | | 4 | | | (13) | | | 24 |
| Income from continuing operations before income taxes | | 624 | | | 708 | | | 1,634 | | | 2,081 |
| Income tax expense | | (96) | | | (116) | | | (283) | | | (362) |
| Income from continuing operations | | 528 | | | 592 | | | 1,351 | | | 1,719 |
| Income from discontinued operations, net of income taxes | | — | | | 2 | | | 7 | | | 1 |
| Net income | $ | 528 | | $ | 594 | | $ | 1,358 | | $ | 1,720 |
| | | | | | | | | | | | |
| Basic earnings per share: | | | | | | | | | | | |
| Income from continuing operations | $ | 1.68 | | $ | 1.84 | | $ | 4.28 | | $ | 5.31 |
| Income from discontinued operations | | — | | | 0.01 | | | 0.02 | | | — |
| Net income | | 1.68 | | | 1.84 | | | 4.30 | | | 5.31 |
| | | | | | | | | | | | |
| Diluted earnings per share: | | | | | | | | | | | |
| Income from continuing operations | $ | 1.67 | | $ | 1.83 | | $ | 4.25 | | $ | 5.26 |
| Income from discontinued operations | | — | | | 0.01 | | | 0.02 | | | — |
| Net income | | 1.67 | | | 1.83 | | | 4.27 | | | 5.26 |
| | | | | | | | | | | | |
| Weighted-average number of shares outstanding: | | | | | | | | | | | |
| Basic | | 315 | | | 322 | | | 316 | | | 324 |
| Diluted | | 317 | | | 324 | | | 318 | | | 327 |
TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | | | | |
|---|---|---|---|---|---|
| | June 30, | | September 30, | ||
| | 2023 | | 2022 | ||
| | (in millions, except share data) | ||||
| Assets | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | $ | 1,131 | | $ | 1,088 |
| Accounts receivable, net of allowance for doubtful accounts of $42 and $45, respectively | | 2,998 | | | 2,865 |
| Inventories | | 2,801 | | | 2,676 |
| Prepaid expenses and other current assets | | 719 | | | 639 |
| Total current assets | | 7,649 | | | 7,268 |
| Property, plant, and equipment, net | | 3,781 | | | 3,567 |
| Goodwill | | 5,528 | | | 5,258 |
| Intangible assets, net | | 1,242 | | | 1,288 |
| Deferred income taxes | | 2,680 | | | 2,498 |
| Other assets | | 821 | | | 903 |
| Total assets | $ | 21,701 | | $ | 20,782 |
| Liabilities, redeemable noncontrolling interests, and shareholders' equity | | | | | |
| Current liabilities: | | | | | |
| Short-term debt | $ | 291 | | $ | 914 |
| Accounts payable | | 1,616 | | | 1,593 |
| Accrued and other current liabilities | | 2,351 | | | 2,125 |
| Total current liabilities | | 4,258 | | | 4,632 |
| Long-term debt | | 3,915 | | | 3,292 |
| Long-term pension and postretirement liabilities | | 735 | | | 695 |
| Deferred income taxes | | 211 | | | 244 |
| Income taxes | | 335 | | | 304 |
| Other liabilities | | 791 | | | 718 |
| Total liabilities | | 10,245 | | | 9,885 |
| Commitments and contingencies | | | | | |
| Redeemable noncontrolling interests | | 107 | | | 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 | | 12,372 | | | 12,832 |
| Treasury shares, at cost, 8,271,688 and 12,749,540 shares, respectively | | (1,085) | | | (1,681) |
| Accumulated other comprehensive loss | | (80) | | | (495) |
| Total shareholders' equity | | 11,349 | | | 10,802 |
| Total liabilities, redeemable noncontrolling interests, and shareholders' equity | $ | 21,701 | | $ | 20,782 |
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Nine Months Ended | ||||||||
| | June 30, | | June 24, | | June 30, | | June 24, | ||||
| | 2023 | | 2022 | | 2023 | | 2022 | ||||
| | (in millions) | ||||||||||
| Cash flows from operating activities: | | | | | | | | | | | |
| Net income | $ | 528 | | $ | 594 | | $ | 1,358 | | $ | 1,720 |
| Income from discontinued operations, net of income taxes | | — | | | (2) | | | (7) | | | (1) |
| Income from continuing operations | | 528 | | | 592 | | | 1,351 | | | 1,719 |
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | | | | | | | | | | | |
| Depreciation and amortization | | 200 | | | 205 | | | 594 | | | 597 |
| Deferred income taxes | | (51) | | | (60) | | | (121) | | | (18) |
| Non-cash lease cost | | 36 | | | 34 | | | 106 | | | 98 |
| Provision for losses on accounts receivable and inventories | | 13 | | | 11 | | | 82 | | | 79 |
| Share-based compensation expense | | 32 | | | 28 | | | 95 | | | 88 |
| Impairment of held for sale businesses | | — | | | — | | | 67 | | | — |
| Other | | 17 | | | (23) | | | 85 | | | (19) |
| Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | | | | | | | | | | | |
| Accounts receivable, net | | 22 | | | (51) | | | (202) | | | (108) |
| Inventories | | (50) | | | (28) | | | (323) | | | (439) |
| Prepaid expenses and other current assets | | (5) | | | 21 | | | (30) | | | 57 |
| Accounts payable | | (36) | | | (63) | | | 68 | | | (48) |
| Accrued and other current liabilities | | 69 | | | (11) | | | (14) | | | (316) |
| Income taxes | | 16 | | | 26 | | | 51 | | | 53 |
| Other | | (12) | | | (102) | | | 185 | | | (219) |
| Net cash provided by operating activities | | 779 | | | 579 | | | 1,994 | | | 1,524 |
| Cash flows from investing activities: | | | | | | | | | | | |
| Capital expenditures | | (166) | | | (205) | | | (538) | | | (556) |
| Proceeds from sale of property, plant, and equipment | | 1 | | | 35 | | | 3 | | | 98 |
| Acquisition of businesses, net of cash acquired | | — | | | (14) | | | (108) | | | (116) |
| Proceeds from divestiture of businesses, net of cash retained by businesses sold | | (3) | | | — | | | 48 | | | 16 |
| Other | | (1) | | | (1) | | | 22 | | | (10) |
| Net cash used in investing activities | | (169) | | | (185) | | | (573) | | | (568) |
| Cash flows from financing activities: | | | | | | | | | | | |
| Net increase (decrease) in commercial paper | | 3 | | | 237 | | | (82) | | | 237 |
| Proceeds from issuance of debt | | — | | | — | | | 499 | | | 588 |
| Repayment of debt | | — | | | — | | | (591) | | | (558) |
| Proceeds from exercise of share options | | 13 | | | 4 | | | 33 | | | 34 |
| Repurchase of common shares | | (208) | | | (378) | | | (674) | | | (1,086) |
| Payment of common share dividends to shareholders | | (186) | | | (180) | | | (541) | | | (506) |
| Other | | (2) | | | (1) | | | (30) | | | (39) |
| Net cash used in financing activities | | (380) | | | (318) | | | (1,386) | | | (1,330) |
| Effect of currency translation on cash | | (4) | | | (5) | | | 8 | | | (9) |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | | 226 | | | 71 | | | 43 | | | (383) |
| Cash, cash equivalents, and restricted cash at beginning of period | | 905 | | | 749 | | | 1,088 | | | 1,203 |
| Cash, cash equivalents, and restricted cash at end of period | $ | 1,131 | | $ | 820 | | $ | 1,131 | | $ | 820 |
| | | | | | | | | | | | |
| Supplemental cash flow information: | | | | | | | | | | | |
| Interest paid on debt, net | $ | 9 | | $ | 10 | | $ | 48 | | $ | 39 |
| Income taxes paid, net of refunds | | 131 | | | 149 | | | 354 | | | 326 |
TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Nine Months Ended | ||||||||
| | June 30, | | June 24, | | June 30, | | June 24, | ||||
| | 2023 | | 2022 | | 2023 | | 2022 | ||||
| | (in millions) | ||||||||||
| Net cash provided by operating activities | $ | 779 | | $ | 579 | | $ | 1,994 | | $ | 1,524 |
| Excluding: | | | | | | | | | | | |
| Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts | | — | | | 14 | | | — | | | (28) |
| Capital expenditures, net | | (165) | | | (170) | | | (535) | | | (458) |
| Free cash flow ^(1)^ | $ | 614 | | $ | 423 | | $ | 1,459 | | $ | 1,038 |
| | | | | | | | | | | | |
| ^(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 30, | | | June 24, | | | June 30, | | | June 24, | | |||||||||||
| | 2023 | | | 2022 | | | 2023 | | | 2022 | | |||||||||||
| | ( in millions) | | ||||||||||||||||||||
| | Net Sales | **** | | | | Net Sales | **** | | | | Net Sales | **** | | | | Net Sales | **** | | | |||
| Transportation Solutions | | | | | $ | 2,300 | | | | | $ | 7,175 | | | | | $ | 6,772 | | | | |
| Industrial Solutions | | | | | | | 1,126 | | | | | | 3,392 | | | | | | 3,246 | | | |
| Communications Solutions | | | | | | | 671 | | | | | | 1,432 | | | | | | 1,904 | | | |
| Total | | | | | $ | 4,097 | | | | | $ | 11,999 | | | | | $ | 11,922 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Operating | | Operating | | | Operating | | Operating | | | Operating | | Operating | | | Operating | | Operating | | |||
| | Income | | Margin | | | Income | | Margin | | | Income | | Margin | | | Income | | Margin | | |||
| Transportation Solutions | | 17.5 | % | | $ | 383 | | 16.7 | % | | $ | 1,040 | | 14.5 | % | | $ | 1,187 | | 17.5 | % | |
| Industrial Solutions | | | 13.1 | | | | 165 | | 14.7 | | | | 440 | | 13.0 | | | | 430 | | 13.2 | |
| Communications Solutions | | | 13.0 | | | | 171 | | 25.5 | | | | 189 | | 13.2 | | | | 479 | | 25.2 | |
| Total | | 15.8 | % | | $ | 719 | | 17.5 | % | | $ | 1,669 | | 13.9 | % | | $ | 2,096 | | 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 | | 18.6 | % | | $ | 397 | | 17.3 | % | | $ | 1,221 | | 17.0 | % | | $ | 1,211 | | 17.9 | % | |
| Industrial Solutions | | | 15.8 | | | | 186 | | 16.5 | | | | 529 | | 15.6 | | | | 501 | | 15.4 | |
| Communications Solutions | | | 14.2 | | | | 178 | | 26.5 | | | | 228 | | 15.9 | | | | 497 | | 26.1 | |
| Total | | 17.3 | % | | $ | 761 | | 18.6 | % | | $ | 1,978 | | 16.5 | % | | $ | 2,209 | | 18.5 | % | |
| | | | | | | | | | | | | | | | | | | | | | | |
| ^(1)^Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures. | |
All values are in US Dollars.
TE CONNECTIVITY LTD.
RECONCILIATION OF NET SALES GROWTH (DECLINE) (UNAUDITED)
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Change in Net Sales for the Quarter Ended June 30, 2023 | |||||||||||||||
| | versus Net Sales for the Quarter Ended June 24, 2022 | |||||||||||||||
| | Net Sales | | | Organic Net Sales | | | | | Acquisitions/ | |||||||
| | Growth (Decline) | | **** | Growth (Decline) ^(1)^ | | **** | Translation ^(2)^ | **** | (Divestiture) | |||||||
| | ( in millions) | |||||||||||||||
| Transportation Solutions ^(3)^: | | **** | | | | | | **** | | | | | | | | |
| Automotive | | 7.2 | % | | $ | 143 | | 8.8 | % | | $ | (25) | | $ | — | |
| Commercial transportation | | | 0.8 | | | | 9 | | 2.1 | | | | (6) | | | — |
| Sensors | | | 4.4 | | | | 11 | | 4.1 | | | | 1 | | | — |
| Total | | | 5.8 | | | | 163 | | 7.1 | | | | (30) | | | — |
| Industrial Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Industrial equipment | | | (10.2) | | | | (46) | | (9.8) | | | | (2) | | | — |
| Aerospace, defense, and marine | | | 8.1 | | | | 35 | | 13.2 | | | | 1 | | | (14) |
| Energy | | | 11.1 | | | | 16 | | 8.0 | | | | (3) | | | 10 |
| Medical | | | 10.2 | | | | 19 | | 10.8 | | | | (1) | | | — |
| Total | | | 1.3 | | | | 24 | | 2.2 | | | | (5) | | | (4) |
| Communications Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Data and devices | | | (40.7) | | | | (174) | | (41.2) | | | | (4) | | | 5 |
| Appliances | | | (30.1) | | | | (71) | | (28.9) | | | | (3) | | | — |
| Total | | | (36.8) | | | | (245) | | (36.7) | | | | (7) | | | 5 |
| Total | | (2.4) | % | | $ | (58) | | (1.4) | % | | $ | (42) | | $ | 1 |
All values are in US Dollars.
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Change in Net Sales for the Nine Months Ended June 30, 2023 | |||||||||||||||
| | versus Net Sales for the Nine Months Ended June 24, 2022 | |||||||||||||||
| | Net Sales | | | Organic Net Sales | | | | | Acquisitions/ | |||||||
| | Growth (Decline) | | | Growth (Decline) ^(1)^ | | | Translation ^(2)^ | | (Divestiture) | |||||||
| | ( in millions) | |||||||||||||||
| Transportation Solutions ^(3)^: | | **** | | | | | | **** | | | | | | | | |
| Automotive | | 8.1 | % | | $ | 651 | | 13.5 | % | | $ | (262) | | $ | — | |
| Commercial transportation | | | (0.3) | | | | 42 | | 3.6 | | | | (45) | | | — |
| Sensors | | | 2.1 | | | | 41 | | 5.1 | | | | (24) | | | — |
| Total | | | 6.0 | | | | 734 | | 10.8 | | | | (331) | | | — |
| Industrial Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Industrial equipment | | | (5.2) | | | | (17) | | (1.2) | | | | (56) | | | — |
| Aerospace, defense, and marine | | | 10.5 | | | | 118 | | 15.2 | | | | (17) | | | (20) |
| Energy | | | 12.6 | | | | 82 | | 14.2 | | | | (24) | | | 15 |
| Medical | | | 12.9 | | | | 68 | | 13.6 | | | | (3) | | | — |
| Total | | | 4.5 | | | | 251 | | 7.7 | | | | (100) | | | (5) |
| Communications Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Data and devices | | | (25.9) | | | | (294) | | (25.1) | | | | (28) | | | 18 |
| Appliances | | | (23.0) | | | | (145) | | (19.8) | | | | (23) | | | — |
| Total | | | (24.8) | | | | (439) | | (23.1) | | | | (51) | | | 18 |
| Total | | 0.6 | % | | $ | 546 | | 4.6 | % | | $ | (482) | | $ | 13 | |
| | | | | | | | | | | | | | | | | |
| ^(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. |
All values are in US Dollars.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended June 30, 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 | | | $ | — | | $ | 27 | | $ | 452 | | |
| Industrial Solutions | | | | | 8 | | | 22 | | | 180 | |
| Communications Solutions | | | | | 1 | | | 4 | | | 60 | |
| Total | | | $ | 9 | | $ | 53 | | $ | 692 | | |
| | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | 17.3 | % |
| | | | | | | | | | | | | |
| Other expense, net | | | $ | — | | $ | — | | $ | (4) | | |
| | | | | | | | | | | | | |
| Income tax expense | | | $ | (2) | | $ | (27) | | $ | (125) | | |
| | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | 18.2 | % |
| | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 7 | | $ | 26 | | $ | 561 | | |
| | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.02 | | $ | 0.08 | | $ | 1.77 | | |
| | | | | | | | | | | | | |
| ^(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. | |
All values are in US Dollars.
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 | | |||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)(2)^ | **** | Tax Items^(3)^ | **** | (Non-GAAP) ^(4)^ | | ||||
| | | |||||||||||||
| Operating income: | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 5 | | $ | 9 | | $ | — | | $ | 397 | |
| Industrial Solutions | | | | 6 | | | 15 | | | — | | | 186 | |
| Communications Solutions | | | | 1 | | | 6 | | | — | | | 178 | |
| Total | | | $ | 12 | | $ | 30 | | $ | — | | $ | 761 | |
| | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | 18.6 | % |
| | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | — | | $ | 4 | |
| | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (3) | | $ | (6) | | $ | (21) | | $ | (146) | |
| | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | 19.5 | % |
| | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 9 | | $ | 24 | | $ | (21) | | $ | 604 | |
| | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 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. | |
All values are in US Dollars.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Nine Months Ended June 30, 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 | | | $ | 2 | | $ | 179 | | $ | 1,221 | | |
| Industrial Solutions | | | | | 21 | | | 68 | | | 529 | |
| Communications Solutions | | | | | 3 | | | 36 | | | 228 | |
| Total | | | $ | 26 | | $ | 283 | | $ | 1,978 | | |
| | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | 16.5 | % |
| | | | | | | | | | | | | |
| Other expense, net | | | $ | — | | $ | — | | $ | (13) | | |
| | | | | | | | | | | | | |
| Income tax expense | | | $ | (5) | | $ | (82) | | $ | (370) | | |
| | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | 19.0 | % |
| | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 21 | | $ | 201 | | $ | 1,573 | | |
| | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.07 | | $ | 0.63 | | $ | 4.95 | | |
| | | | | | | | | | | | | |
| ^(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. | |
All values are in US Dollars.
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 | | |||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)(2)^ | **** | Tax Items^(3)^ | **** | (Non-GAAP) ^(4)^ | | ||||
| | | |||||||||||||
| Operating income: | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 12 | | $ | 12 | | $ | — | | $ | 1,211 | |
| Industrial Solutions | | | | 24 | | | 47 | | | — | | | 501 | |
| Communications Solutions | | | | 2 | | | 16 | | | — | | | 497 | |
| Total | | | $ | 38 | | $ | 75 | | $ | — | | $ | 2,209 | |
| | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | 18.5 | % |
| | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | (11) | | $ | 13 | |
| | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (8) | | $ | (18) | | $ | (18) | | $ | (406) | |
| | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | 18.6 | % |
| | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 30 | | $ | 57 | | $ | (29) | | $ | 1,777 | |
| | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 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, 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. | |
All values are in US Dollars.
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 | | |||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | Tax Items^(2)^ | **** | (Non-GAAP) ^(3)^ | | ||||
| | | |||||||||||||
| Operating income: | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 4 | | $ | 56 | | $ | — | | $ | 407 | |
| Industrial Solutions | | | | 8 | | | 19 | | | — | | | 204 | |
| Communications Solutions | | | | 3 | | | 7 | | | — | | | 146 | |
| Total | | | $ | 15 | | $ | 82 | | $ | — | | $ | 757 | |
| | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | 17.4 | % |
| | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | — | | $ | 4 | |
| | | | | | | | | | | | | | | |
| Income tax (expense) benefit | | | $ | (3) | | $ | (16) | | $ | (182) | | $ | (145) | |
| | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | 19.4 | % |
| | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 12 | | $ | 66 | | $ | (182) | | $ | 604 | |
| | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 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. | |
All values are in US Dollars.
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 | | ||||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)(2)^ | **** | Tax Items^(3)^ | **** | (Non-GAAP) ^(4)^ | | ||||
| | | |||||||||||||
| Operating income: | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 16 | | $ | 68 | | $ | — | | $ | 1,618 | |
| Industrial Solutions | | | | 32 | | | 66 | | | — | | | 705 | |
| Communications Solutions | | | | 5 | | | 23 | | | — | | | 643 | |
| Total | | | $ | 53 | | $ | 157 | | $ | — | | $ | 2,966 | |
| | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | 18.2 | % |
| | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | (11) | | $ | 17 | |
| | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (11) | | $ | (34) | | $ | (200) | | $ | (551) | |
| | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | 18.8 | % |
| | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 42 | | $ | 123 | | $ | (211) | | $ | 2,381 | |
| | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 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. | |
All values are in US Dollars.
TE CONNECTIVITY LTD.
RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of July 26, 2023
(UNAUDITED)
| | | | |
|---|---|---|---|
| | Outlook for | | |
| | Quarter Ending | | |
| | September 29, | | |
| | 2023 | | |
| Diluted earnings per share from continuing operations | $ | 1.63 | |
| Restructuring and other charges, net | | 0.10 | |
| Acquisition-related charges | | 0.02 | |
| Adjusted diluted earnings per share from continuing operations ^(1)^ | $ | 1.75 | |
| | | | |
| | | | |
| ^(1)^ See description of non-GAAP financial measures. |
Exhibit 99.2
| EVERY CONNECTION COUNTS<br>TE Connectivity<br>Third Quarter<br>2023 Earnings<br>July 26, 2023 |
|---|
| Forward-Looking Statements<br>and Non-GAAP Financial Measures<br>2<br>Forward-Looking Statements<br>This presentation contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of<br>1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in<br>circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results,<br>performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking<br>and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking<br>statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do<br>so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law.<br>The forward-looking statements in this presentation include statements addressing our future financial condition and operating results, and<br>the impact on our operations resulting from the coronavirus disease 2019 (“COVID-19”). Examples of factors that could cause actual results<br>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<br>for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange<br>rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate, including<br>continuing military conflict between Russia and Ukraine resulting from Russia’s invasion of Ukraine or escalating tensions in surrounding<br>countries; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws<br>and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the effects of Swiss tax<br>reform. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments,<br>which are highly uncertain and cannot be predicted. Such developments may include the geographic spread of the virus, the severity of the<br>virus, the duration of the outbreak, the impact on our suppliers’ and customers’ supply chains, the actions that may be taken by various<br>governmental authorities in response to the outbreak in jurisdictions in which we operate, and the possible impact on the global economy and<br>local economies in which we operate. More detailed information about these and other factors is set forth in TE Connectivity Ltd.'s Annual<br>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-<br>K and other reports filed by us with the U.S. Securities and Exchange Commission.<br>Non-GAAP Financial Measures<br>Where we have used non-GAAP financial measures, reconciliations to the most comparable GAAP measure are provided, along with a<br>disclosure on the usefulness of the non-GAAP financial measure, in this presentation. |
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| Earnings Highlights<br>Q3 Sales in line with Expectations & Adjusted EPS Exceeding Guidance<br>• Sales of $4.0B, with Y/Y organic growth in the Transportation and Industrial Segments<br>• Transportation up 7% organically Y/Y, with growth in all businesses<br>• Industrial up 2% organically Y/Y, with growth in AD&M, Medical, and Energy<br>• Communications down 37% organically Y/Y, due to expected market weakness<br>• Orders of ~$4.0B, flat sequentially, indicating stability<br>• Adjusted Operating Margins of 17.3%, Adjusted EPS of $1.77<br>• Expanded margins 130bps sequentially driven by the Transportation & Industrial segments<br>• Strong Free Cash Flow generation of ~$1.5B YTD, up ~40% Y/Y; ~$1.2B returned to shareholders<br>• Connecting Our World report issued, with commitments to the Science Based Targets Initiative<br>Q4 Guidance<br>• Expect Q4 Sales of ~$4.0B and Adjusted EPS ~$1.75<br>• Sales & EPS expected to be similar to Q3 levels, with Y/Y Sales growth in the Transportation &<br>Industrial Segments<br>Q4 sales comparisons to prior year exclude the impact of an additional week in the fourth quarter of fiscal 2022 which contributed sales of $306 million<br>3 Organic Net Sales Growth (Decline), Adjusted EPS, Adjusted Operating Margin and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations |
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| Reported FY22 FY23 FY23 Q3 Growth<br>Q3 Q2 Q3 Y/Y Q/Q<br>Transportation 2,303 2,412 2,374 3% (2)%<br>Industrial 1,312 1,193 1,183 (10)% (1)%<br>Communications 582 388 407 (30)% 5%<br>Total TE 4,197 3,993 3,964 (6)% (1)%<br>Book to Bill 1.02 0.96 0.99<br>Segment Orders Summary<br>($ in millions)<br>4<br>• Transportation book to bill of 0.98,<br>reflecting ongoing stable demand<br>• Industrial book to bill of 1.04,<br>reflecting ongoing strength in AD&M,<br>Energy and Medical end markets<br>• Communications book to bill of 0.96,<br>with continued consumption of<br>inventory across our customers’<br>supply chain, offset by new orders<br>for AI applications<br>Order Patterns Reflecting Overall Stability in All Segments |
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| Transportation Solutions<br>$2,300 $2,433<br>Q3 2022 Q3 2023<br>• Automotive organic growth across all regions. Strong<br>performance continues to be driven by our leading<br>position in electric vehicles along with electronification<br>trends<br>• Commercial Transportation organic growth in Asia<br>and Europe, partially offset by declines in North<br>America<br>• Sensors organic growth driven by automotive<br>applications<br>Y/Y Growth Rates Reported Organic<br>Automotive $1,747 7% 9%<br>Commercial<br>Transportation 403 1% 2%<br>Sensors 283 4% 4%<br>Transportation<br>Solutions $2,433 6% 7%<br>Q3 Sales Q3 Business Performance<br>Q3 Adjusted Operating Margin<br>$ in Millions<br>Reported<br>Up 6%<br>Organic<br>Up 7%<br>Margins reflecting<br>strong operational<br>performance along<br>with benefit of price<br>increases<br>5 Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non-GAAP financial measures; see Appendix for descriptions and reconciliations<br>17.3% 18.6%<br>Q3 2022 Q3 2023<br>Adjusted EBITDA Margin 23.2% 23.5% |
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| Industrial Solutions<br>$1,126 $1,141<br>Q3 2022 Q3 2023<br>Y/Y Growth Rates Reported Organic<br>Industrial Equipment $423 (10)% (10)%<br>Aerospace, Defense<br>and Marine 293 8% 13%<br>Energy 230 11% 8%<br>Medical 195 10% 11%<br>Industrial Solutions $1,141 1% 2%<br>Margins reflect<br>expected volume<br>decline in Industrial<br>Equipment business<br>16.5% 15.8%<br>Q3 2022 Q3 2023<br>Adjusted EBITDA Margin 20.7% 20.7%<br>• Industrial Equipment decline driven by inventory<br>digestion in the distribution channel<br>• AD&M organic growth reflects ongoing market<br>improvement in Commercial Aerospace<br>• Energy organic growth across all regions, with<br>continued momentum in renewable applications<br>• Medical organic growth with increases in interventional<br>procedures<br>$ in Millions<br>Q3 Sales Q3 Business Performance<br>Q3 Adjusted Operating Margin<br>Reported<br>Up 1%<br>Organic<br>Up 2%<br>6 Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non-GAAP financial measures; see Appendix for descriptions and reconciliations |
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| $671<br>$424<br>Q3 2022 Q3 2023<br>Reported<br>Down 37%<br>Organic<br>Down 37%<br>Y/Y Growth Rates Reported Organic<br>Data & Devices $252 (41)% (41)%<br>Appliances 172 (30)% (29)%<br>Communications<br>Solutions $424 (37)% (37)%<br>• Data & Devices decline driven by ongoing<br>consumption of inventory across our customers’<br>supply chain<br>• Appliances impacted by market weakness in all<br>26.5% regions<br>14.2%<br>Q3 2022 Q3 2023<br>Margin impacted<br>by lower volume<br>Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non-GAAP financial measures; see Appendix for descriptions and reconciliations<br>Communications Solutions<br>Q3 Sales<br>Q3 Adjusted Operating Margin<br>Q3 Business Performance<br>$ in Millions<br>Adjusted EBITDA Margin 29.7% 19.8%<br>7 |
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| Q3 Financial Summary<br>($ in Millions, except per share amounts) Q3 FY22 Q3 FY23<br>Net Sales $ 4,097 $ 3,998<br>Operating Income $ 719 $ 630<br>Operating Margin 17.5% 15.8%<br>Acquisition-Related Charges 12 9<br>Restructuring & Other Charges, Net* 30 53<br>Adjusted Operating Income $ 761 $ 692<br>Adjusted Operating Margin 18.6% 17.3%<br>Earnings Per Share** $ 1.83 $ 1.67<br>Acquisition-Related Charges 0.03 0.02<br>Restructuring & Other Charges, Net 0.07 0.08<br>Tax Items (0.06) -<br>Adjusted EPS $ 1.86 $ 1.77<br>** Represents Diluted Earnings Per Share from Continuing Operations<br>Adjusted Operating Income, Adjusted Operating Margin and Adjusted EPS are non-GAAP financial measures; see Appendix for descriptions and reconciliations<br>8<br>* Net restructuring charges represent $42M of the $53M in Q3 FY23 |
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| Q3 Financial Performance<br>$4,097 $4,160 $3,998<br>Q3 2022 Q2 2023 Q3 2023<br>$1.86 $1.65 $1.77<br>Q3 2022 Q2 2023 Q3 2023<br>Adjusted<br>EBITDA<br>Margin<br>23.6% 20.9% 22.3%<br>18.6%<br>16.0% 17.3%<br>Q3 2022 Q2 2023 Q3 2023<br>Adjusted Operating Margin, Adjusted EPS, Adjusted EBITDA Margin and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations<br>Sales Adjusted Operating Margin<br>Adjusted EPS Free Cash Flow<br>Sequential Growth in Margins & EPS Driven by Strong<br>Operational Performance<br>9<br>$1,038<br>$1,459<br>YTD 2022 YTD 2023<br>$ in Millions<br>$ in Millions<br>+40%<br>Y/Y<br>~$1.2B<br>returned to<br>shareholders<br>YTD |
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| EVERY CONNECTION COUNTS<br>Additional<br>Information |
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| Y/Y Q3 2023<br>Adjusted EPS is a non-GAAP financial measure; see Appendix for description and reconciliation<br>Sales<br>(in millions)<br>Adjusted EPS<br>Q3 2022 Results $4,097 $1.86<br>Operational Performance (57) (0.06)<br>FX Impact (42) (0.05)<br>Tax Rate Impact - 0.02<br>Q3 2023 Results $3,998 $1.77<br>11 |
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| Y/Y Q4 2023<br>Adjusted EPS, Net Sales Excluding the Impact of the Additional Week, and Adjusted EPS Excluding the Impact of the Additional Week are non-GAAP financial measures; see Appendix for<br>descriptions and reconciliations<br>Sales<br>(in millions)<br>Adjusted EPS<br>Q4 2022 Results (13 weeks)* $4,053 $1.75<br>Operational Performance (121) 0.01<br>FX Impact 68 (0.02)<br>Tax Rate Impact - 0.01<br>Q4 2023 Guidance $4,000 $1.75<br>12<br>* Note: Q4 FY22 13 week does not include the impact of the additional week which contributed sales of $306M and Adjusted EPS of $0.13 |
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| ($ in Millions) Q3 2022 Q3 2023<br>Beginning Cash Balance $749 $905<br>Free Cash Flow 423 614<br>Dividends (180) (186)<br>Share repurchases (378) (208)<br>Net increase in debt 237 3<br>Acquisition of business, net of cash acquired (14) -<br>Other (17) 3<br>Ending Cash Balance $820 $1,131<br>Total Debt $4,202 $4,206<br>A/R $3,132 $2,998<br>Days Sales Outstanding* 69 68<br>Inventory $3,028 $2,801<br>Days on Hand* 96 90<br>Accounts Payable $1,917 $1,616<br>Days Outstanding* 62 55<br>Free Cash Flow and Working Capital Liquidity, Cash & Debt<br>($ in Millions) Q3 2022 Q3 2023<br>Cash from Operating Activities $579 $779<br>Capital expenditures, net<br>Cash paid pursuant to collateral<br>requirements related to cross-currency<br>swap contracts<br>(170)<br>14<br>(165)<br>-<br>Free Cash Flow $423 $614<br>Free Cash Flow is a non-GAAP financial measure; see Appendix for description and reconciliation<br>* Adjusted to exclude the impact of acquisitions<br>Q3 Balance Sheet & Cash Flow Summary<br>13 |
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| EVERY CONNECTION COUNTS<br>Appendix |
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| 15<br>Non-GAAP Financial Measures<br>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<br>accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures provide supplemental information and should not be<br>considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its<br>decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance<br>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<br>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<br>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<br>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<br>non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies.<br>The following provides additional information regarding our non-GAAP financial measures:<br>• Organic Net Sales Growth (Decline) – represents net sales growth (decline) (the most comparable GAAP financial measure) excluding the impact of foreign currency<br>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<br>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<br>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<br>plans.<br>• Adjusted Operating Income and Adjusted Operating Margin – represent operating income and operating margin, respectively, (the most comparable GAAP financial<br>measures) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if any. We<br>utilize these adjusted measures in combination with operating income and operating margin to assess segment level operating performance and to provide insight to<br>management in evaluating segment operating plan execution and market conditions. Adjusted Operating Income is a significant component in our incentive compensation<br>plans.<br>• Adjusted Other Income (Expense), Net – represents net other income (expense) (the most comparable GAAP financial measure) before special items including tax sharing<br>income related to adjustments to prior period tax returns and other items, if any.<br>• Adjusted Income Tax (Expense) Benefit and Adjusted Effective Tax Rate – represent income tax (expense) benefit and effective tax rate, respectively, (the most<br>comparable GAAP financial measures) after adjusting for the tax effect of special items including restructuring and other charges, acquisition-related charges, impairment of<br>goodwill, other income or charges, and certain significant tax items, if any.<br>• Adjusted Income from Continuing Operations – represents income from continuing operations (the most comparable GAAP financial measure) before special items including<br>restructuring and other charges, acquisition-related charges, impairment of goodwill, tax sharing income related to adjustments to prior period tax returns and other tax<br>items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects.<br>• Adjusted Earnings Per Share – represents diluted earnings per share from continuing operations (the most comparable GAAP financial measure) before special items<br>including restructuring and other charges, acquisition-related charges, impairment of goodwill, tax sharing income related to adjustments to prior period tax returns and other<br>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<br>incentive compensation plans. |
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| 16<br>• Adjusted EBITDA and Adjusted EBITDA Margin - represent net income and net income as a percentage of net sales, respectively, (the most comparable GAAP financial<br>measures) before interest expense, interest income, income taxes, depreciation, and amortization, as adjusted for net other income (expense), income (loss) from<br>discontinued operations, and special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if<br>any.<br>• 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)<br>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<br>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.<br>• 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<br>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<br>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<br>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,<br>minus net capital expenditures. Voluntary pension contributions are excluded from the GAAP financial measure because this activity is driven by economic financing<br>decisions rather than operating activity. Certain special items, including net payments related to pre-separation tax matters and cash paid (collected) pursuant to collateral<br>requirements related to cross-currency swap contracts, are also excluded by management in evaluating Free Cash Flow. Net capital expenditures consist of capital<br>expenditures less proceeds from the sale of property, plant, and equipment. These items are subtracted because they represent long-term commitments. In the calculation<br>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<br>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<br>available for future discretionary expenditures, as our definition of Free Cash Flow does not consider certain non-discretionary expenditures, such as debt payments. In<br>addition, we may have other discretionary expenditures, such as discretionary dividends, share repurchases, and business acquisitions, that are not considered in the<br>calculation of Free Cash Flow.<br>• 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<br>of our ability to convert earnings to cash.<br>Non-GAAP Financial Measures (cont.) |
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| Segment Summary<br>17<br><br><br>Transportation Solutions $ 2,433 $ 2,300 $ 7,175 $ 6,772<br>Industrial Solutions 1,141 1,126 3,392 3,246<br>Communications Solutions 424 671 1,432 1,904<br>Total $ 3,998 $ 4,097 $ 11,999 $ 11,922<br>O perating O perating O perating O perating<br>Margin Margin Margin Margin<br>Transportation Solutions $ 425 17.5 % $ 383 16.7 % $ 1,040 14.5 % $ 1,187 17.5 %<br>Industrial Solutions 150 13.1 165 14.7 440 13.0 430 13.2<br>Communications Solutions 55 13.0 171 25.5 189 13.2 479 25.2<br>Total $ 630 15.8 % $ 719 17.5 % $ 1,669 13.9 % $ 2,096 17.6 %<br>Adjusted Adjusted Adjusted Adjusted<br>O perating O perating O perating O perating<br>Margin (1) Margin (1) Margin (1) Margin (1)<br>Transportation Solutions $ 452 18.6 % $ 397 17.3 % $ 1,221 17.0 % $ 1,211 17.9 %<br>Industrial Solutions 180 15.8 186 16.5 529 15.6 501 15.4<br>Communications Solutions 60 14.2 178 26.5 228 15.9 497 26.1<br>Total $ 692 17.3 % $ 761 18.6 % $ 1,978 16.5 % $ 2,209 18.5 %<br>(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures.<br>2023 2022<br>($ in millions)<br>Adjusted<br>O perating<br>Income (1)<br>Adjusted<br>O perating<br>Adjusted<br>O perating<br>Income (1)<br>Net Sales Net Sales Net Sales<br>Income (1)<br>Adjusted<br>O perating<br>Income (1)<br>Income<br>O perating O perating<br>Income<br>O perating<br>Income<br>Net Sales<br>O perating<br>Income<br>2023 2022<br>For the Q uarters Ended<br>June 30, June 24, June 30, June 24,<br>For the Nine Months Ended |
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| Reconciliation of Net Sales Growth<br>18<br><br>Transportation Solutions (3):<br>Automotive $ 118 7.2 % $ 143 8.8 % $ (25) $ —<br>Commercial transportation 3 0.8 9 2.1 (6) —<br>Sensors 12 4.4 11 4.1 1 —<br>Total 133 5.8 163 7.1 (30) —<br>Industrial Solutions (3):<br>Industrial equipment (48) (10.2) (46) (9.8) (2) —<br>Aerospace, defense, and marine 22 8.1 35 13.2 1 (14)<br>Energy 23 11.1 16 8.0 (3) 10<br>Medical 18 10.2 19 10.8 (1) —<br>Total 15 1.3 24 2.2 (5) (4)<br>Communications Solutions (3)<br>:<br>Data and devices (173) (40.7) (174) (41.2) (4) 5<br>Appliances (74) (30.1) (71) (28.9) (3) —<br>Total (247) (36.8) (245) (36.7) (7) 5<br>Total $ (99) (2.4) % $ (58) (1.4) % $ (42) $ 1<br>($ in millions)<br>Translation (2)<br>Acquisitions/<br>(Divestiture)<br>Net Sales<br>Growth (Decline)<br>O rganic Net Sales<br>Growth (Decline) (1)<br>Change in Net Sales for the Q uarter Ended June 30, 2023<br>versus Net Sales for the Q uarter Ended June 24, 2022<br>Transportation Solutions (3):<br>Automotive $ 389 8.1 % $ 651 13.5 % $ (262) $ —<br>Commercial transportation (3) (0.3) 42 3.6 (45) —<br>Sensors 17 2.1 41 5.1 (24) —<br>Total 403 6.0 734 10.8 (331) —<br>Industrial Solutions (3)<br>:<br>Industrial equipment (73) (5.2) (17) (1.2) (56) —<br>Aerospace, defense, and marine 81 10.5 118 15.2 (17) (20)<br>Energy 73 12.6 82 14.2 (24) 15<br>Medical 65 12.9 68 13.6 (3) —<br>Total 146 4.5 251 7.7 (100) (5)<br>Communications Solutions (3):<br>Data and devices (304) (25.9) (294) (25.1) (28) 18<br>Appliances (168) (23.0) (145) (19.8) (23) —<br>Total (472) (24.8) (439) (23.1) (51) 18<br>Total $ 77 0.6 % $ 546 4.6 % $ (482) $ 13<br>Growth (Decline) Growth (Decline) (1) Translation (2) (Divestiture)<br>Change in Net Sales for the Nine Months Ended June 30, 2023<br>versus Net Sales for the Nine Months Ended June 24, 2022<br>(1) Organic net sales growth (decline) is a non-GAAP financial measure. See description of non-GAAP financial measures.<br>(2) Represents the change in net sales resulting from changes in foreign currency exchange rates.<br>(3) Industry end market information is presented consistently with our internal management reporting and may be periodically revised as management<br>deems necessary.<br>($ in millions)<br>Net Sales O rganic Net Sales Acquisitions/ |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended June 30, 2023<br>19<br><br>Operating income:<br>Transportation Solutions $ 425 $ — $ 27 $ 452<br>Industrial Solutions 150 8 22 180<br>Communications Solutions 55 1 4 60<br>Total $ 630 $ 9 $ 53 $ 692<br>Operating margin 15.8 % 17.3 %<br>Other expense, net $ (4) $ — $ — $ (4)<br>Income tax expense $ (96) $ (2) $ (27) $ (125)<br>Effective tax rate 15.4 % 18.2 %<br>Income from continuing operations $ 528 $ 7 $ 26 $ 561<br>Diluted earnings per share from continuing<br>operations $ 1.67 $ 0.02 $ 0.08 $ 1.77<br><br>Related and O ther Adjusted<br>Acquisition- Restructuring<br>Adjustments<br>(2) See description of non-GAAP financial measures.<br>(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<br>laws in effect for each such jurisdiction.<br>U.S. GAAP Charges (1) (Non-GAAP) (2) Charges, Net (1)<br>($ in millions, except per share data) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended June 24, 2022<br>20<br><br>Operating income:<br>Transportation Solutions $ 383 $ 5 $ 9 $ — $ 397<br>Industrial Solutions 165 6 15 — 186<br>Communications Solutions 171 1 6 — 178<br>Total $ 719 $ 12 $ 30 $ — $ 761<br>Operating margin 17.5 % 18.6 %<br>Other income, net $ 4 $ — $ — $ — $ 4<br>Income tax expense $ (116) $ (3) $ (6) $ (21) $ (146)<br>Effective tax rate 16.4 % 19.5 %<br>Income from continuing operations $ 592 $ 9 $ 24 $ (21) $ 604<br>Diluted earnings per share from<br>continuing operations $ 1.83 $ 0.03 $ 0.07 $ (0.06) $ 1.86<br><br>U.S. GAAP<br>Acquisition-Charges (1)<br>Adjustments<br>Adjusted<br>(Non-GAAP) (4)<br>Related<br>Tax Items (3)<br>Restructuring<br>Charges, Net (1)(2)<br>and O ther<br>(2) Includes $26 million recorded in net restructuring and other charges and $4 million recorded in cost of sales.<br>(4) See description of non-GAAP financial measures.<br>(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws<br>in effect for each such jurisdiction.<br>($ in millions, except per share data)<br>(3) Includes a $21 million income tax benefit related to the tax impacts of an intercompany transaction. |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Nine Months Ended June 30, 2023<br>21<br><br>Operating income:<br>Transportation Solutions $ 1,040 $ 2 $ 179 $ 1,221<br>Industrial Solutions 440 21 68 529<br>Communications Solutions 189 3 36 228<br>Total $ 1,669 $ 26 $ 283 $ 1,978<br>Operating margin 13.9 % 16.5 %<br>Other expense, net $ (13) $ — $ — $ (13)<br>Income tax expense $ (283) $ (5) $ (82) $ (370)<br>Effective tax rate 17.3 % 19.0 %<br>Income from continuing operations $ 1,351 $ 21 $ 201 $ 1,573<br>Diluted earnings per share from continuing<br>operations $ 4.25 $ 0.07 $ 0.63 $ 4.95<br><br>Acquisition- Restructuring<br>Adjustments<br>($ in millions, except per share data)<br>(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<br>laws in effect for each such jurisdiction.<br>(2) See description of non-GAAP financial measures.<br>Related and O ther Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (2) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Nine Months Ended June 24, 2022<br>22<br><br>Operating income:<br>Transportation Solutions $ 1,187 $ 12 $ 12 $ — $ 1,211<br>Industrial Solutions 430 24 47 — 501<br>Communications Solutions 479 2 16 — 497<br>Total $ 2,096 $ 38 $ 75 $ — $ 2,209<br>Operating margin 17.6 % 18.5 %<br>Other income, net $ 24 $ — $ — $ (11) $ 13<br>Income tax expense $ (362) $ (8) $ (18) $ (18) $ (406)<br>Effective tax rate 17.4 % 18.6 %<br>Income from continuing operations $ 1,719 $ 30 $ 57 $ (29) $ 1,777<br>Diluted earnings per share from<br>continuing operations $ 5.26 $ 0.09 $ 0.17 $ (0.09) $ 5.43<br><br>Acquisition- Restructuring<br>Adjustments<br>Related and O ther Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1)(2) Tax Items (3) (Non-GAAP) (4)<br>(4) See description of non-GAAP financial measures.<br>($ in millions, except per share data)<br>(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<br>in effect for each such jurisdiction.<br>(2) Includes $59 million recorded in net restructuring and other charges and $16 million recorded in cost of sales.<br>(3) Includes a $57 million income tax benefit related to the tax impacts of an intercompany transaction, $27 million of income tax expense related<br>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<br>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<br>terms of the purchase agreement. |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended September 30, 2022<br>23<br><br>Operating income:<br>Transportation Solutions $ 347 $ 4 $ 56 $ — $ 407<br>Industrial Solutions 177 8 19 — 204<br>Communications Solutions 136 3 7 — 146<br>Total $ 660 $ 15 $ 82 $ — $ 757<br>Operating margin 15.1 % 17.4 %<br>Other income, net $ 4 $ — $ — $ — $ 4<br>Income tax (expense) benefit $ 56 $ (3) $ (16) $ (182) $ (145)<br>Effective tax rate (8.6) % 19.4 %<br>Income from continuing operations $ 708 $ 12 $ 66 $ (182) $ 604<br>Diluted earnings per share from<br>continuing operations $ 2.21 $ 0.04 $ 0.21 $ (0.57) $ 1.88<br><br>Adjustments<br>(3) See description of non-GAAP financial measures.<br>Acquisition- Restructuring<br>($ in millions, except per share data)<br>(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<br>laws in effect for each such jurisdiction.<br>(2) Includes a $67 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit<br>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<br>associated primarily with improved current and expected future operating profit and taxable income.<br>Related and O ther Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1) Tax Items (2) (Non-GAAP) (3) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Year Ended September 30, 2022<br>24<br><br>Operating income:<br>Transportation Solutions $ 1,534 $ 16 $ 68 $ — $ 1,618<br>Industrial Solutions 607 32 66 — 705<br>Communications Solutions 615 5 23 — 643<br>Total $ 2,756 $ 53 $ 157 $ — $ 2,966<br>Operating margin 16.9 % 18.2 %<br>Other income, net $ 28 $ — $ — $ (11) $ 17<br>Income tax expense $ (306) $ (11) $ (34) $ (200) $ (551)<br>Effective tax rate 11.2 % 18.8 %<br>Income from continuing operations $ 2,427 $ 42 $ 123 $ (211) $ 2,381<br>Diluted earnings per share from<br>continuing operations $ 7.47 $ 0.13 $ 0.38 $ (0.65) $ 7.33<br>($ in millions, except per share data)<br>(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<br>laws in effect for each such jurisdiction.<br>(3) Includes a $124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit<br>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<br>associated primarily with improved current and expected future operating profit and taxable income. Also includes $27 million of income tax<br>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<br>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<br>pursuant to the terms of the purchase agreement.<br>(2) Includes $141 million recorded in net restructuring and other charges and $16 million recorded in cost of sales.<br>(4) See description of non-GAAP financial measures.<br>U.S. GAAP Charges (1) Charges, Net (1)(2) Tax Items (3) (Non-GAAP) (4)<br>Related and O ther Adjusted<br>Acquisition- Restructuring<br>Adjustments |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended March 31, 2023<br>25<br><br>Operating income:<br>Transportation Solutions $ 333 $ — $ 78 $ 411<br>Industrial Solutions 134 7 33 174<br>Communications Solutions 70 1 8 79<br>Total $ 537 $ 8 $ 119 $ 664<br>Operating margin 12.9 % 16.0 %<br>Other expense, net $ (4) $ — $ — $ (4)<br>Income tax expense $ (100) $ (1) $ (26) $ (127)<br>Effective tax rate 19.0 % 19.5 %<br>Income from continuing operations $ 425 $ 7 $ 93 $ 525<br>Diluted earnings per share from continuing<br>operations $ 1.34 $ 0.02 $ 0.29 $ 1.65<br><br>Acquisition- Restructuring<br>Adjustments<br>U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (2)<br>Related and O ther Adjusted<br>($ in millions, except per share data)<br>(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and<br>the tax laws in effect for each such jurisdiction.<br>(2) See description of non-GAAP financial measures. |
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| Reconciliation of Free Cash Flow<br>26<br>Net cash provided by operating activities $ 779 $ 579 $ 1,994 $ 1,524<br>Net cash used in investing activities (169) (185) (573) (568)<br>Net cash used in financing activities (380) (318) (1,386) (1,330)<br>Effect of currency translation on cash (4) (5) 8 (9)<br>Net increase (decrease) in cash, cash equivalents, and restricted cash $ 226 $ 71 $ 43 $ (383)<br>Net cash provided by operating activities $ 779 $ 579 $ 1,994 $ 1,524<br>Excluding:<br>Cash (collected) paid pursuant to collateral requirements related<br>to cross-currency swap contracts — 14 — (28)<br>Capital expenditures, net (165) (170) (535) (458)<br>Free cash flow (1) $ 614 $ 423 $ 1,459 $ 1,038<br>(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.<br>2023 2022 2023 2022<br>(in millions)<br>For the Q uarters Ended<br>June 30, June 24, June 30, June 24,<br>For the Nine Months Ended |
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| Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin<br>27<br>Net income $ 528 $ 433 $ 594<br>Income from discontinued operations — (8) (2)<br>Income tax expense 96 100 116<br>Other (income) expense, net 4 4 (4)<br>Interest expense 20 20 18<br>Interest income (18) (12) (3)<br>Operating income $ 630 $ 537 $ 719<br>Acquisition-related charges 9 8 12<br>Restructuring and other charges, net 53 119 30<br>Adjusted operating income (1)<br> 692 664 761<br>Depreciation and amortization 200 207 205<br>Adjusted EBITDA (1) $ 892 $ 871 $ 966<br>Net sales $ 3,998 $ 4,160 $ 4,097<br>Net income as a percentage of net sales 13.2 % 10.4 % 14.5 %<br>Adjusted EBITDA margin (1)<br> 22.3 % 20.9 % 23.6 %<br>Operating income $ 425 $ 150 $ 55 $ 630 $ 383 $ 165 $ 171 $ 719<br>Acquisition-related charges — 8 1 9 5 6 1 12<br>Restructuring and other charges, net 27 22 4 53 9 15 6 30<br>Adjusted operating income (1)<br> 452 180 60 692 397 186 178 761<br>Depreciation and amortization 120 56 24 200 137 47 21 205<br>Adjusted EBITDA (1) $ 572 $ 236 $ 84 $ 892 $ 534 $ 233 $ 199 $ 966<br>Net sales $ 2,433 $ 1,141 $ 424 $ 3,998 $ 2,300 $ 1,126 $ 671 $ 4,097<br>Operating margin 17.5 % 13.1 % 13.0 % 15.8 % 16.7 % 14.7 % 25.5 % 17.5 %<br>Adjusted operating margin (1)<br> 18.6 % 15.8 % 14.2 % 17.3 % 17.3 % 16.5 % 26.5 % 18.6 %<br>Adjusted EBITDA margin (1)<br> 23.5 % 20.7 % 19.8 % 22.3 % 23.2 % 20.7 % 29.7 % 23.6 %<br>For the Q uarters Ended<br>June 30, 2023 June 24, 2022<br>June 30,<br>2023<br>June 24,<br>2022<br>For the Q uarters Ended<br>($ in millions)<br>March 31,<br>2023<br>Transportation Industrial Communications<br>Solutions<br>Communications<br>Total<br>Transportation<br>Solutions<br>Industrial<br>Solutions<br>(1) See description of non-GAAP financial measures.<br>Total<br>($ in millions)<br>Solutions Solutions Solutions |
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| Impact of Additional Week on Net Sales - QTD<br>28<br>Net Sales $ 4,359 $ (306) $ 4,053<br>For the Q uarter Ended September 30, 2022<br>U.S. GAAP<br>Adjustment<br>14 Weeks Impact of 13 Weeks<br>(2) See description of non-GAAP financial measures.<br>(1) 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<br>for the fourth quarter of the fiscal year.<br> (in millions)<br>14th Week (Non-GAAP) (1)(2) |
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| Impact of Additional Week on EPS - QTD<br>29<br>Adjustment<br>Acquisition- Restructuring 14 Weeks 13 Weeks<br>Related and O ther Adjusted Impact of Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1) Tax Items (2) (Non-GAAP) (3) 14th Week (Non-GAAP) (3)(4)<br>Diluted earnings per share from<br> continuing operations $ 2.21 $ 0.04 $ 0.21 $ (0.57) $ 1.88 $ (0.13) $ 1.75<br>(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<br>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<br>operating profit and taxable income.<br>(3) See description of non-GAAP financial measures.<br>(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 adjusted earnings per share<br>for the fourth quarter of the fiscal year.<br>Adjustments<br>(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<br>jurisdiction. |
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| Reconciliation of Forward-Looking Non-GAAP Financial Measures<br>to Forward-Looking GAAP Financial Measures<br>30<br>Diluted earnings per share from continuing operations $ 1.63<br>Restructuring and other charges, net 0.10<br>Acquisition-related charges 0.02<br>Adjusted diluted earnings per share from continuing operations (2) $ 1.75<br>Net sales growth (decline) (8.2) %<br>Impact of additional week in fiscal 2022 (3)<br> 6.9<br>Net sales growth (decline) excluding the impact of the additional week in fiscal 2022 (2)<br> (1.3)<br>Translation (1.7)<br>(Acquisitions) divestitures, net 0.2<br>Organic net sales growth (decline) excluding the impact of the additional week in fiscal 2022 (2)<br> (2.8) %<br>Effective tax rate 18.7 % 17.7 %<br>Effective tax rate adjustments (4)<br> 0.3 1.4<br>Adjusted effective tax rate (2)<br> 19.0 % 19.1 %<br>2023 (1)<br>September 29, O utlook for<br>Fiscal 2023 (1)<br>(4) Includes adjustments for special tax items and the tax effect of acquisition-related charges and net restructuring and other charges, calculated based<br>on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.<br>(1) Outlook is as of July 26, 2023.<br>(2) See description of non-GAAP financial measures.<br>(3) The impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales for the<br>fourth quarter of the fiscal year.<br>Q uarter Ending<br>O utlook for |
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