TE Connectivity plc 10-Q for FY2024 Q1

TE Connectivity plc (TEL)

10-Q 2024-01-26 For: 2023-12-29

Added on April 02, 2026

About this 10-Q

TE Connectivity plc filed this 10-Q on January 26, 2024, covering the quarter ended December 29, 2023 (FY2024 Q1).

Headline figures

Quarter ended December 29, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.83B; down 0.3% from $3.84B a year earlier
Net income: $1.8B; up 354.2% from net income of $397M a year earlier
Diluted EPS: $5.76; up 364.5% from $1.24 a year earlier

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(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 29, 2023
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


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


		Page
Part I.	Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Operations for the Quarters Ended December 29, 2023 and December 30, 2022 (unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the Quarters Ended December 29, 2023 and December 30, 2022 (unaudited)	2
	Condensed Consolidated Balance Sheets as of December 29, 2023 and September 29, 2023 (unaudited)	3
	Condensed Consolidated Statements of Equity for the Quarters Ended December 29, 2023 and December 30, 2022 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Quarters Ended December 29, 2023 and December 30, 2022 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

Part II.	Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 5.	Other Information	36
Item 6.	Exhibits	36
Signatures		37


	For the
	Quarters Ended
	December 29,		December 30,
	2023		2022

	(in millions, except per share data)
Net sales	$	3,831	$	3,841
Cost of sales		2,507		2,654
Gross margin		1,324		1,187
Selling, general, and administrative expenses		424		392
Research, development, and engineering expenses		173		173
Acquisition and integration costs		8		9
Restructuring and other charges, net		21		111
Operating income		698		502
Interest income		22		9
Interest expense		(18)		(21)
Other expense, net		(3)		(5)
Income from continuing operations before income taxes		699		485
Income tax (expense) benefit		1,105		(87)
Income from continuing operations		1,804		398
Loss from discontinued operations, net of income taxes		(1)		(1)
Net income	$	1,803	$	397

Basic earnings per share:
Income from continuing operations	$	5.80	$	1.26
Loss from discontinued operations		—		—
Net income		5.80		1.25

Diluted earnings per share:
Income from continuing operations	$	5.76	$	1.25
Loss from discontinued operations		—		—
Net income		5.76		1.24

Weighted-average number of shares outstanding:
Basic		311		317
Diluted		313		319


	For the
	Quarters Ended
	December 29,		December 30,
	2023		2022

	(in millions)
Net income	$	1,803	$	397
Other comprehensive income:
Currency translation		163		305
Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes		(18)		2
Gains on cash flow hedges, net of income taxes		28		69
Other comprehensive income		173		376
Comprehensive income		1,976		773
Less: comprehensive income attributable to noncontrolling interests		(4)		(9)
Comprehensive income attributable to TE Connectivity Ltd.	$	1,972	$	764


	December 29,		September 29,
	2023		2023

	(in millions, except share
	data)
Assets
Current assets:
Cash and cash equivalents	$	1,170	$	1,661
Accounts receivable, net of allowance for doubtful accounts of $37 and $30, respectively		2,828		2,967
Inventories		2,783		2,552
Prepaid expenses and other current assets		660		712
Total current assets		7,441		7,892
Property, plant, and equipment, net		3,854		3,754
Goodwill		5,836		5,463
Intangible assets, net		1,278		1,175
Deferred income taxes		3,852		2,600
Other assets		810		828
Total assets	$	23,071	$	21,712
Liabilities, redeemable noncontrolling interests, and equity
Current liabilities:
Short-term debt	$	613	$	682
Accounts payable		1,690		1,563
Accrued and other current liabilities		1,708		2,218
Total current liabilities		4,011		4,463
Long-term debt		3,585		3,529
Long-term pension and postretirement liabilities		744		728
Deferred income taxes		188		185
Income taxes		380		365
Other liabilities		914		787
Total liabilities		9,822		10,057
Commitments and contingencies (Note 9)
Redeemable noncontrolling interests		108		104
Equity:
TE Connectivity Ltd. shareholders' equity:
Common shares, CHF 0.57 par value, 322,470,281 shares authorized and issued		142		142
Accumulated earnings		14,678		12,947
Treasury shares, at cost, 13,050,787 and 10,487,742 shares, respectively		(1,695)		(1,380)
Accumulated other comprehensive income (loss)		11		(158)
Total TE Connectivity Ltd. shareholders' equity		13,136		11,551
Noncontrolling interests		5		—
Total equity		13,141		11,551
Total liabilities, redeemable noncontrolling interests, and equity	$	23,071	$	21,712


	For the Quarter Ended December 29, 2023
											Accumulated		TE Connectivity
											Other		Ltd.		Non-
	Common Shares			Treasury Shares			Contributed		Accumulated		Comprehensive		Shareholders'		controlling		Total
	Shares	Amount		Shares	Amount		Surplus		Earnings		Income (Loss)		Equity		Interests		Equity

	(in millions)
Balance at September 29, 2023	322	$	142	(10)	$	(1,380)	$	—	$	12,947	$	(158)	$	11,551	$	—	$	11,551
Acquisition	—		—	—		—		—		—		—		—		5		5
Net income	—		—	—		—		—		1,803		—		1,803		—		1,803
Other comprehensive income	—		—	—		—		—		—		169		169		—		169
Share-based compensation expense	—		—	—		—		34		—		—		34		—		34
Exercise of share options	—		—	—		11		—		—		—		11		—		11
Restricted share award vestings and other activity	—		—	—		94		(34)		(72)		—		(12)		—		(12)
Repurchase of common shares	—		—	(3)		(420)		—		—		—		(420)		—		(420)
Balance at December 29, 2023	322	$	142	(13)	$	(1,695)	$	—	$	14,678	$	11	$	13,136	$	5	$	13,141


	For the Quarter Ended December 30, 2022
											Accumulated		TE Connectivity
											Other		Ltd.		Non-
	Common Shares			Treasury Shares			Contributed		Accumulated		Comprehensive		Shareholders'		controlling		Total
	Shares	Amount		Shares	Amount		Surplus		Earnings		Loss		Equity		Interests		Equity

	(in millions)
Balance at September 30, 2022	331	$	146	(13)	$	(1,681)	$	—	$	12,832	$	(495)	$	10,802	$	—	$	10,802
Net income	—		—	—		—		—		397		—		397		—		397
Other comprehensive income	—		—	—		—		—		—		367		367		—		367
Share-based compensation expense	—		—	—		—		32		—		—		32		—		32
Exercise of share options	—		—	—		11		—		—		—		11		—		11
Restricted share award vestings and other activity	—		—	1		49		(32)		(29)		—		(12)		—		(12)
Repurchase of common shares	—		—	(2)		(233)		—		—		—		(233)		—		(233)
Balance at December 30, 2022	331	$	146	(14)	$	(1,854)	$	—	$	13,200	$	(128)	$	11,364	$	—	$	11,364


	Balance at												Balance at
	September 29,				Changes in		Cash		Non-Cash		Currency		December 29,
	2023		Charges		Estimate		Payments		Items		Translation		2023

	(in millions)
Fiscal 2024 Actions:
Employee severance	$	—	$	5	$	—	$	—	$	—	$	—	$	5
Fiscal 2023 Actions:
Employee severance		187		—		(8)		(20)		—		8		167
Facility and other exit costs		2		1		—		(3)		—		—		—
Property, plant, and equipment		—		4		—		—		(4)		—		—
Total		189		5		(8)		(23)		(4)		8		167
Pre-Fiscal 2023 Actions:
Employee severance		127		—		5		(23)		—		4		113
Facility and other exit costs		4		2		—		(2)		—		—		4
Total		131		2		5		(25)		—		4		117
Total Activity	$	320	$	12	$	(3)	$	(48)	$	(4)	$	12	$	289


	Total		Cumulative		Remaining
	Expected		Charges		Expected
	Charges		Incurred		Charges

	(in millions)
Transportation Solutions	$	153	$	138	$	15
Industrial Solutions		80		73		7
Communications Solutions		35		33		2
Total	$	268	$	244	$	24


	Transportation		Industrial		Communications
	Solutions		Solutions		Solutions		Total

	(in millions)
September 29, 2023⁽¹⁾	$	1,478	$	3,263	$	722	$	5,463
Acquisition		—		257		—		257
Currency translation and other		29		71		16		116
December 29, 2023⁽¹⁾	$	1,507	$	3,591	$	738	$	5,836


	December 29, 2023						September 29, 2023
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount

	(in millions)
Customer relationships	$	1,876	$	(856)	$	1,020	$	1,720	$	(806)	$	914
Intellectual property		1,129		(884)		245		1,186		(938)		248
Other		19		(6)		13		19		(6)		13
Total	$	3,024	$	(1,746)	$	1,278	$	2,925	$	(1,750)	$	1,175


	(in millions)
Remainder of fiscal 2024	$	128
Fiscal 2025		161
Fiscal 2026		154
Fiscal 2027		135
Fiscal 2028		102
Fiscal 2029		95
Thereafter		503
Total	$	1,278


	Non-U.S. Plans				U.S. Plans
	For the				For the
	Quarters Ended				Quarters Ended
	December 29,		December 30,		December 29,		December 30,
	2023		2022		2023		2022

	(in millions)
Operating expense:
Service cost	$	7	$	7	$	2	$	2
Other (income) expense:
Interest cost		15		14		10		9
Expected returns on plan assets		(12)		(11)		(10)		(9)
Amortization of net actuarial loss		1		1		1		1
Amortization of prior service credit		(1)		(1)		—		—
Net periodic pension benefit cost	$	10	$	10	$	3	$	3


		Grant-Date
	Shares	Fair Value
	(in millions)
Share options	0.9	$	39.77
Restricted share awards	0.4		131.77
Performance share awards	0.2		131.77


		For the
		Quarters Ended
	December 29,		December 30,
	2023		2022

	(in millions)
Foreign currency exchange losses on intercompany loans and external borrowings⁽¹⁾	$	(107)	$	(165)
Losses on cross-currency swap contracts designated as hedges of net investment⁽¹⁾		(125)		(137)


Expected share price volatility		31	%
Risk-free interest rate		4.6	%
Expected annual dividend per share	$	2.36
Expected life of options (in years)		5.3


	For the
	Quarters Ended
	December 29,		December 30,
	2023		2022

	(in millions)
Transportation Solutions:
Automotive	$	1,776	$	1,649
Commercial transportation		356		348
Sensors		241		262
Total Transportation Solutions		2,373		2,259
Industrial Solutions:
Industrial equipment		330		434
Aerospace, defense, and marine		290		264
Energy		205		189
Medical		200		173
Total Industrial Solutions		1,025		1,060
Communications Solutions:
Data and devices		279		329
Appliances		154		193
Total Communications Solutions		433		522
Total	$	3,831	$	3,841


	Change in Net Sales for the Quarter Ended December 29, 2023
	versus Net Sales for the Quarter Ended December 30, 2022
	Net Sales				Organic Net Sales						Acquisition
	Growth (Decline)				Growth (Decline)				Translation		(Divestitures)

	($ in millions)
Transportation Solutions	$	114	5.0	%	$	113	5.0	%	$	26	$	(25)
Industrial Solutions		(35)	(3.3)			(52)	(4.9)			18		(1)
Communications Solutions		(89)	(17.0)			(89)	(17.0)			—		—
Total	$	(10)	(0.3)	%	$	(28)	(0.7)	%	$	44	$	(26)


	For the		For the
	Quarter Ended		Fiscal Year Ended
	December 29,		September 29,
	2023		2023

	(in millions)
Statement of Operations Data:
Loss from continuing operations	$	(153)	$	(606)
Net loss		(153)		(606)


					Maximum
				Total Number of	Approximate
				Shares Purchased	Dollar Value
				as Part of	of Shares that May
	Total Number	Average Price		Publicly Announced	Yet Be Purchased
	of Shares	Paid Per		Plans or	Under the Plans
Period	Purchased⁽¹⁾	Share⁽¹⁾		Programs⁽²⁾	or Programs⁽²⁾
September 30–October 27, 2023	813,638	$	121.46	813,400	$	636,647,983
October 28–December 1, 2023	1,490,417		128.43	1,374,573		460,520,746
December 2–December 29, 2023	1,135,361		137.42	1,051,968		1,815,756,314
Total	3,439,416		129.75	3,239,941


Exhibit Number		Exhibit
10.1	*‡	TE Connectivity Ltd. 2007 Stock and Incentive Plan (amended and restated as of December 12, 2023)
22.1	*	Guaranteed Securities
31.1	*	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	*	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	**	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document⁽¹⁾
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File⁽²⁾


	TE CONNECTIVITY LTD.

	By:	/s/ Heath A. Mitts Heath A. Mitts Executive Vice President and Chief Financial Officer (Principal Financial Officer)


Date: January 26, 2024

	/s/ Terrence R. Curtin
	Terrence R. Curtin
	Chief Executive Officer


Date: January 26, 2024

	/s/ Heath A. Mitts
	Heath A. Mitts
	Executive Vice President and Chief Financial Officer