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): October 27, 2021
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 October 27, 2021, TE Connectivity Ltd. (the “Company”) issued a press release reporting the Company’s fourth quarter and full year results for fiscal 2021. 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 October 27, 2021 (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
| ExhibitNo. | **** | Description |
|---|---|---|
| 99.1 | Press release issued October 27, 2021 | |
| 99.2 | Presentation - TE Connectivity Q4 2021 Earnings Call (October 27, 2021) | |
| | | |
| 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: October 27, 2021 | 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 fourth quarter and full year results for fiscal year 2021
Q4 earnings per share exceed expectations; full year results demonstrating market outperformance and strength and diversity of portfolio
SCHAFFHAUSEN, Switzerland – Oct. 27, 2021 – TE Connectivity Ltd. (NYSE: TEL) today reported results for the fourth quarter and fiscal year ended Sept. 24, 2021.
Fourth Quarter Highlights
| ● | Net sales were $3.8 billion, up approximately 17% versus prior year on a reported basis. |
|---|---|
| ● | Operating margin expansion year over year with strong performance across all segments. |
| --- | --- |
| ● | GAAP diluted earnings per share (EPS) from continuing operations were $2.40, and adjusted EPS were $1.69, an increase of 46% versus the prior year. |
| --- | --- |
| ● | Cash flow from continuing operating activities was $774 million and free cash flow was $536 million. |
| --- | --- |
| ● | Completed acquisition of ERNI Group AG (ERNI), a European connector manufacturer focused on factory automation markets. |
| --- | --- |
Full Year Highlights
| ● | Net sales were $14.9 billion, up 23% from fiscal year 2020. |
|---|---|
| ● | Operating margin expansion year over year, with increases across all segments. |
| --- | --- |
| ● | GAAP EPS from continuing operations were $6.77 versus a loss of $0.78 in fiscal year 2020, and adjusted EPS were $6.51, versus $4.26 in fiscal year 2020. |
| --- | --- |
| ● | Cash flow from continuing operating activities was $2.7 billion and free cash flow was $2.1 billion, with approximately $1.5 billion returned to shareholders and over $400 million deployed for acquisitions. |
| --- | --- |
| ● | Company set new ESG commitment to decrease greenhouse gas emissions by over 40% on an absolute basis by 2030. |
| --- | --- |
“We had a strong finish to fiscal 2021 with sales and adjusted earnings in the fourth quarter exceeding expectations despite broader global supply challenges,” said TE Connectivity CEO Terrence Curtin. “I am very pleased with our teams’ ongoing execution in a very dynamic backdrop. Our performance demonstrates the
strength and diversity of our portfolio, which is reflected in sales and earnings above pre-COVID levels. We will continue to benefit from our leadership positions in long-term technology trends of electric vehicles, data and cloud, factory automation and renewable investments, which are enabling us to grow above the markets we serve. We expect to deliver continued growth in both sales and earnings in the first quarter of fiscal 2022.”
First Quarter FY22 Outlook
For the first quarter of fiscal 2022, the company expects net sales of approximately $3.7 billion, reflecting an increase of 5% on a reported basis and 4% on an organic basis year over year. GAAP EPS from continuing operations is expected to be approximately $1.50 year over year, with adjusted EPS of approximately $1.60, up 9% year over year.
Information about TE Connectivity's use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables.
Conference Call and Webcast
The company will hold a conference call today beginning at 8:30 a.m. ET. The dial-in information is provided here:
| ● | At TE Connectivity's website: investors.te.com |
|---|---|
| ● | By telephone: For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the dial-in number in the United States is (888) 330-3417, and for international callers, the dial-in number is (646) 960-0804. |
| --- | --- |
| ● | A replay of the conference call will be available on TE Connectivity’s investor website at investors.te.com at 11:30 a.m. ET on Oct. 27, 2021. |
| --- | --- |
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 (Loss) and Adjusted Operating Margin – represent operating income (loss) 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 (loss) 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 (Loss) 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 (Loss) from Continuing Operations – represents income (loss) 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 (Loss) Per Share – represents diluted earnings (loss) 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 continuing 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 continuing 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; 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. 25, 2020 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.
#
| <br><br><br><br><br><br><br><br> | <br><br><br><br><br><br><br><br> | |
|---|---|---|
| Contacts: | Media Relations :<br><br>Fernando Vivanco<br><br>TE Connectivity<br><br>610-893-9756<br><br>Fernando.Vivanco@te.com | Investor Relations :<br><br>Sujal Shah<br><br>TE Connectivity<br><br>610-893-9790<br><br>Sujal.Shah@te.com |
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Years Ended | ||||||||
| | September 24, | | September 25, | | September 24, | | September 25, | ||||
| | 2021 | 2020 | 2021 | **** | 2020 | ||||||
| | (in millions, except per share data) | ||||||||||
| Net sales | $ | 3,818 | | $ | 3,261 | | $ | 14,923 | | $ | 12,172 |
| Cost of sales | | 2,555 | | | 2,292 | | | 10,036 | | | 8,437 |
| Gross margin | | 1,263 | | | 969 | | | 4,887 | | | 3,735 |
| Selling, general, and administrative expenses | | 384 | | | 352 | | | 1,512 | | | 1,392 |
| Research, development, and engineering expenses | | 173 | | | 148 | | | 677 | | | 613 |
| Acquisition and integration costs | | 8 | | | 9 | | | 31 | | | 36 |
| Restructuring and other charges, net | | 38 | | | 113 | | | 233 | | | 257 |
| Impairment of goodwill | | — | | | — | | | — | | | 900 |
| Operating income | | 660 | | | 347 | | | 2,434 | | | 537 |
| Interest income | | 3 | | | 2 | | | 17 | | | 15 |
| Interest expense | | (14) | | | (12) | | | (56) | | | (48) |
| Other income (expense), net | | (22) | | | — | | | (17) | | | 20 |
| Income from continuing operations before income taxes | | 627 | | | 337 | | | 2,378 | | | 524 |
| Income tax (expense) benefit | | 167 | | | (109) | | | (123) | | | (783) |
| Income (loss) from continuing operations | | 794 | | | 228 | | | 2,255 | | | (259) |
| Income from discontinued operations, net of income taxes | | — | | | 2 | | | 6 | | | 18 |
| Net income (loss) | $ | 794 | | $ | 230 | | $ | 2,261 | | $ | (241) |
| | | | | | | | | | | | |
| Basic earnings (loss) per share: | | | | | | | | | | | |
| Income (loss) from continuing operations | $ | 2.42 | | $ | 0.69 | | $ | 6.83 | | $ | (0.78) |
| Income from discontinued operations | | — | | | 0.01 | | | 0.02 | | | 0.05 |
| Net income (loss) | | 2.42 | | | 0.70 | | | 6.85 | | | (0.73) |
| | | | | | | | | | | | |
| Diluted earnings (loss) per share: | | | | | | | | | | | |
| Income (loss) from continuing operations | $ | 2.40 | | $ | 0.69 | | $ | 6.77 | | $ | (0.78) |
| Income from discontinued operations | | — | | | 0.01 | | | 0.02 | | | 0.05 |
| Net income (loss) | | 2.40 | | | 0.69 | | | 6.79 | | | (0.73) |
| | | | | | | | | | | | |
| Weighted-average number of shares outstanding: | | | | | | | | | | | |
| Basic | | 328 | | | 330 | | | 330 | | | 332 |
| Diluted | | 331 | | | 332 | | | 333 | | | 332 |
TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | | | | |
|---|---|---|---|---|---|
| | September 24, | | September 25, | ||
| | 2021 | | 2020 | ||
| | (in millions, except share data) | ||||
| Assets | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | $ | 1,203 | | $ | 945 |
| Accounts receivable, net of allowance for doubtful accounts of $41 and $29, respectively | | 2,928 | | | 2,377 |
| Inventories | | 2,511 | | | 1,950 |
| Prepaid expenses and other current assets | | 621 | | | 512 |
| Total current assets | | 7,263 | | | 5,784 |
| Property, plant, and equipment, net | | 3,778 | | | 3,650 |
| Goodwill | | 5,590 | | | 5,224 |
| Intangible assets, net | | 1,549 | | | 1,593 |
| Deferred income taxes | | 2,499 | | | 2,178 |
| Other assets | | 783 | | | 813 |
| Total assets | $ | 21,462 | | $ | 19,242 |
| Liabilities, redeemable noncontrolling interests, and shareholders' equity | | | | | |
| Current liabilities: | | | | | |
| Short-term debt | $ | 503 | | $ | 694 |
| Accounts payable | | 1,911 | | | 1,276 |
| Accrued and other current liabilities | | 2,242 | | | 1,720 |
| Total current liabilities | | 4,656 | | | 3,690 |
| Long-term debt | | 3,589 | | | 3,452 |
| Long-term pension and postretirement liabilities | | 1,139 | | | 1,336 |
| Deferred income taxes | | 181 | | | 143 |
| Income taxes | | 302 | | | 252 |
| Other liabilities | | 847 | | | 874 |
| Total liabilities | | 10,714 | | | 9,747 |
| Commitments and contingencies | | | | | |
| Redeemable noncontrolling interests | | 114 | | | 112 |
| Shareholders' equity: | | | | | |
| Common shares, CHF 0.57 par value, 336,099,881 shares authorized and issued, and 338,953,381 shares authorized and issued, respectively | | 148 | | | 149 |
| Accumulated earnings | | 11,709 | | | 10,348 |
| Treasury shares, at cost, 9,060,919 and 8,295,878 shares, respectively | | (1,055) | | | (669) |
| Accumulated other comprehensive loss | | (168) | | | (445) |
| Total shareholders' equity | | 10,634 | | | 9,383 |
| Total liabilities, redeemable noncontrolling interests, and shareholders' equity | $ | 21,462 | | $ | 19,242 |
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Years Ended | ||||||||
| | September 24, | | September 25, | | September 24, | | September 25, | ||||
| | 2021 | | 2020 | | 2021 | | 2020 | ||||
| | (in millions) | ||||||||||
| Cash flows from operating activities: | | | | | | | | | | | |
| Net income (loss) | $ | 794 | | $ | 230 | | $ | 2,261 | | $ | (241) |
| Income from discontinued operations, net of income taxes | | — | | | (2) | | | (6) | | | (18) |
| Income (loss) from continuing operations | | 794 | | | 228 | | | 2,255 | | | (259) |
| Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: | | | | | | | | | | | |
| Impairment of goodwill | | — | | | — | | | — | | | 900 |
| Depreciation and amortization | | 179 | | | 181 | | | 769 | | | 711 |
| Deferred income taxes | | (292) | | | 76 | | | (354) | | | 535 |
| Non-cash lease cost | | 30 | | | 29 | | | 120 | | | 108 |
| Provision for losses on accounts receivable and inventories | | 14 | | | (14) | | | 46 | | | 14 |
| Share-based compensation expense | | 21 | | | 20 | | | 94 | | | 74 |
| Other | | (16) | | | 14 | | | (61) | | | 54 |
| Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | | | | | | | | | | | |
| Accounts receivable, net | | 120 | | | (245) | | | (518) | | | (63) |
| Inventories | | (74) | | | 253 | | | (556) | | | (89) |
| Prepaid expenses and other current assets | | (5) | | | 24 | | | (19) | | | 51 |
| Accounts payable | | (86) | | | 1 | | | 560 | | | (80) |
| Accrued and other current liabilities | | 63 | | | 105 | | | 173 | | | (99) |
| Income taxes | | 45 | | | (29) | | | 106 | | | (9) |
| Other | | (19) | | | 76 | | | 61 | | | 143 |
| Net cash provided by continuing operating activities | | 774 | | | 719 | | | 2,676 | | | 1,991 |
| Net cash provided by discontinued operating activities | | — | | | 1 | | | — | | | 1 |
| Net cash provided by operating activities | | 774 | | | 720 | | | 2,676 | | | 1,992 |
| Cash flows from investing activities: | | | | | | | | | | | |
| Capital expenditures | | (236) | | | (121) | | | (690) | | | (560) |
| Proceeds from sale of property, plant, and equipment | | 1 | | | 11 | | | 86 | | | 17 |
| Acquisition of businesses, net of cash acquired | | (297) | | | (11) | | | (423) | | | (339) |
| Other | | (8) | | | 4 | | | (10) | | | 17 |
| Net cash used in investing activities | | (540) | | | (117) | | | (1,037) | | | (865) |
| Cash flows from financing activities: | | | | | | | | | | | |
| Net decrease in commercial paper | | — | | | — | | | — | | | (219) |
| Proceeds from issuance of debt | | — | | | — | | | 661 | | | 593 |
| Repayment of debt | | (2) | | | — | | | (708) | | | (352) |
| Proceeds from exercise of share options | | 37 | | | 26 | | | 167 | | | 55 |
| Repurchase of common shares | | (313) | | | — | | | (831) | | | (523) |
| Payment of common share dividends to shareholders | | (164) | | | (159) | | | (647) | | | (625) |
| Transfers from discontinued operations | | — | | | 1 | | | — | | | 1 |
| Other | | (1) | | | (2) | | | (28) | | | (34) |
| Net cash used in continuing financing activities | | (443) | | | (134) | | | (1,386) | | | (1,104) |
| Net cash used in discontinued financing activities | | — | | | (1) | | | — | | | (1) |
| Net cash used in financing activities | | (443) | | | (135) | | | (1,386) | | | (1,105) |
| Effect of currency translation on cash | | (4) | | | 3 | | | 5 | | | (4) |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | | (213) | | | 471 | | | 258 | | | 18 |
| Cash, cash equivalents, and restricted cash at beginning of period | | 1,416 | | | 474 | | | 945 | | | 927 |
| Cash, cash equivalents, and restricted cash at end of period | $ | 1,203 | | $ | 945 | | $ | 1,203 | | $ | 945 |
| | | | | | | | | | | | |
| Supplemental cash flow information: | | | | | | | | | | | |
| Interest paid on debt, net | $ | 18 | | $ | 19 | | $ | 58 | | $ | 50 |
| Income taxes paid, net of refunds | | 80 | | | 62 | | | 371 | | | 257 |
TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Years Ended | ||||||||
| | September 24, | | September 25, | | September 24, | | September 25, | ||||
| | 2021 | | 2020 | | 2021 | | 2020 | ||||
| | (in millions) | ||||||||||
| Net cash provided by continuing operating activities | $ | 774 | | $ | 719 | | $ | 2,676 | | $ | 1,991 |
| Excluding: | | | | | | | | | | | |
| Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts | | (3) | | | 39 | | | 9 | | | 34 |
| Capital expenditures, net | | (235) | | | (110) | | | (604) | | | (543) |
| Free cash flow ^(1)^ | $ | 536 | | $ | 648 | | $ | 2,081 | | $ | 1,482 |
| | | | | | | | | | | | |
| ^(1)^Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures. |
TE CONNECTIVITY LTD.
CONSOLIDATED SEGMENT DATA (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | | For the Years Ended | | |||||||||||||||||
| | September 24, | | | September 25, | | | September 24, | | | September 25, | | |||||||||||
| | 2021 | | | 2020 | | | 2021 | | | 2020 | | |||||||||||
| | ( in millions) | | ||||||||||||||||||||
| | Net Sales | **** | | | | Net Sales | **** | | | | Net Sales | **** | | | | Net Sales | **** | | | |||
| Transportation Solutions | | | | | $ | 1,865 | | | | | $ | 8,974 | | | | | $ | 6,845 | | | | |
| Industrial Solutions | | | | | | | 959 | | | | | | 3,844 | | | | | | 3,713 | | | |
| Communications Solutions | | | | | | | 437 | | | | | | 2,105 | | | | | | 1,614 | | | |
| Total | | | | | $ | 3,261 | | | | | $ | 14,923 | | | | | $ | 12,172 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | |||||||
| | Income | | Margin | | Income | | Margin | | Income | | Margin | | Income (Loss) | | Margin | |||||||
| Transportation Solutions | | 17.6 | % | | $ | 198 | | 10.6 | % | | $ | 1,526 | | 17.0 | % | | $ | (93) | | (1.4) | % | |
| Industrial Solutions | | | 13.2 | | | | 85 | | 8.9 | | | | 469 | | 12.2 | | | | 412 | | 11.1 | |
| Communications Solutions | | | 23.1 | | | | 64 | | 14.6 | | | | 439 | | 20.9 | | | | 218 | | 13.5 | |
| Total | | 17.3 | % | | $ | 347 | | 10.6 | % | | $ | 2,434 | | 16.3 | % | | $ | 537 | | 4.4 | % | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | | 18.0 | % | | $ | 245 | | 13.1 | % | | $ | 1,679 | | 18.7 | % | | $ | 952 | | 13.9 | % | |
| Industrial Solutions | | | 15.9 | | | | 133 | | 13.9 | | | | 557 | | 14.5 | | | | 522 | | 14.1 | |
| Communications Solutions | | | 24.7 | | | | 95 | | 21.7 | | | | 465 | | 22.1 | | | | 260 | | 16.1 | |
| Total | | 18.5 | % | | $ | 473 | | 14.5 | % | | $ | 2,701 | | 18.1 | % | | $ | 1,734 | | 14.2 | % | |
| | | | | | | | | | | | | | | | | | | | | | | |
| ^(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 September 24, 2021 | |||||||||||||||
| | versus Net Sales for the Quarter Ended September 25, 2020 | |||||||||||||||
| | Net Sales | | | Organic Net Sales | | | | | Acquisition/ | |||||||
| | Growth (Decline) | | **** | Growth (Decline) ^(1)^ | | **** | Translation ^(2)^ | **** | (Divestitures) | |||||||
| | ( in millions) | |||||||||||||||
| Transportation Solutions ^(3)^: | | **** | | | | | | **** | | | | | | | | |
| Automotive | | 13.8 | % | | $ | 160 | | 11.7 | % | | $ | 24 | | $ | — | |
| Commercial transportation | | | 39.8 | | | | 103 | | 37.9 | | | | 3 | | | — |
| Sensors | | | 16.3 | | | | 38 | | 15.4 | | | | 5 | | | — |
| Total | | | 17.9 | | | | 301 | | 16.0 | | | | 32 | | | — |
| Industrial Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Industrial equipment | | | 33.1 | | | | 91 | | 31.5 | | | | 5 | | | — |
| Aerospace, defense, oil, and gas | | | (16.5) | | | | (57) | | (18.1) | | | | 4 | | | 2 |
| Energy | | | 2.6 | | | | 15 | | 7.7 | | | | — | | | (10) |
| Medical | | | 4.7 | | | | 8 | | 4.7 | | | | — | | | — |
| Total | | | 6.0 | | | | 57 | | 6.2 | | | | 9 | | | (8) |
| Communications Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Data and devices | | | 37.3 | | | | 91 | | 35.5 | | | | 6 | | | — |
| Appliances | | | 39.0 | | | | 65 | | 35.7 | | | | 4 | | | — |
| Total | | | 38.0 | | | | 156 | | 35.6 | | | | 10 | | | — |
| Total | | 17.1 | % | | $ | 514 | | 15.8 | % | | $ | 51 | | $ | (8) |
All values are in US Dollars.
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Change in Net Sales for the Year Ended September 24, 2021 | |||||||||||||||
| | versus Net Sales for the Year Ended September 25, 2020 | |||||||||||||||
| | Net Sales | | | Organic Net Sales | | | | | Acquisitions/ | |||||||
| | Growth (Decline) | | | Growth (Decline) ^(1)^ | | | Translation ^(2)^ | | (Divestitures) | |||||||
| | ( in millions) | |||||||||||||||
| Transportation Solutions ^(3)^: | | **** | | | | | | **** | | | | | | | | |
| Automotive | | 30.1 | % | | $ | 1,243 | | 25.0 | % | | $ | 233 | | $ | — | |
| Commercial transportation | | | 39.6 | | | | 377 | | 35.2 | | | | 39 | | | — |
| Sensors | | | 26.6 | | | | 119 | | 13.4 | | | | 29 | | | 89 |
| Total | | | 31.1 | | | | 1,739 | | 25.1 | | | | 301 | | | 89 |
| Industrial Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Industrial equipment | | | 27.2 | | | | 253 | | 22.7 | | | | 46 | | | — |
| Aerospace, defense, oil, and gas | | | (13.8) | | | | (209) | | (17.4) | | | | 25 | | | 18 |
| Energy | | | 2.9 | | | | 30 | | 4.1 | | | | 20 | | | (29) |
| Medical | | | (3.3) | | | | (25) | | (3.6) | | | | 2 | | | — |
| Total | | | 3.5 | | | | 49 | | 1.3 | | | | 93 | | | (11) |
| Communications Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Data and devices | | | 23.1 | | | | 199 | | 20.5 | | | | 26 | | | — |
| Appliances | | | 41.5 | | | | 242 | | 37.2 | | | | 24 | | | — |
| Total | | | 30.4 | | | | 441 | | 27.2 | | | | 50 | | | — |
| Total | | 22.6 | % | | $ | 2,229 | | 18.2 | % | | $ | 444 | | $ | 78 | |
| | | | | | | | | | | | | | | | | |
| ^(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 September 24, 2021
(UNAUDITED)
| | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Adjustments | | | | | ||||||||||
| | | | Acquisition- | | Restructuring | | | | | | | | |||||
| | | | Related | | and Other | | | | | | Adjusted | | |||||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | Other Items^(1)(2)^ | **** | Tax Items^(3)^ | **** | (Non-GAAP) ^(4)^ | | |||||
| | | ||||||||||||||||
| Operating income: | | | | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 3 | | $ | 5 | | $ | — | | $ | — | | $ | 395 | |
| Industrial Solutions | | | | 4 | | | 24 | | | — | | | — | | | 162 | |
| Communications Solutions | | | | 1 | | | 9 | | | — | | | — | | | 149 | |
| Total | | | $ | 8 | | $ | 38 | | $ | — | | $ | — | | $ | 706 | |
| | | | | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | | | | 18.5 | % |
| | | | | | | | | | | | | | | | | | |
| Other income (expense), net | | | $ | — | | $ | — | | $ | 28 | | $ | — | | $ | 6 | |
| | | | | | | | | | | | | | | | | | |
| Income tax (expense) benefit | | | $ | (1) | | $ | 3 | | $ | (6) | | $ | (304) | | $ | (141) | |
| | | | | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | | | | 20.1 | % |
| | | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 7 | | $ | 41 | | $ | 22 | | $ | (304) | | $ | 560 | |
| | | | | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.02 | | $ | 0.12 | | $ | 0.07 | | $ | (0.92) | | $ | 1.69 | |
| | | | | | | | | | | | | | | | | | |
| (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | ||||||||||||||||
| (2) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract. | | ||||||||||||||||
| (3) Represents a 327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and expected future operating profit and taxable income, and 23 million of income tax expense associated with the tax impacts of an intercompany transaction. | | ||||||||||||||||
| (4) See description of non-GAAP financial measures. | |
All values are in US Dollars.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended September 25, 2020
(UNAUDITED)
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | Adjustments | | | | | |||||||
| | | | | Acquisition- | | Restructuring | | | | | | ||||
| | | | | Related | | and Other | | | | Adjusted | | ||||
| | U.S. GAAP | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | Tax Items ^(2)^ | **** | (Non-GAAP) ^(3)^ | | ||||
| | ( in millions, except per share data) | | |||||||||||||
| Operating income: | | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 11 | | $ | 36 | | $ | — | | $ | 245 | | |
| Industrial Solutions | | | | | 2 | | | 46 | | | — | | | 133 | |
| Communications Solutions | | | | | — | | | 31 | | | — | | | 95 | |
| Total | | | $ | 13 | | $ | 113 | | $ | — | | $ | 473 | | |
| | | | | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | | | | 14.5 | % |
| | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (4) | | $ | (21) | | $ | 56 | | $ | (78) | | |
| | | | | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | | | | 16.8 | % |
| | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 9 | | $ | 92 | | $ | 56 | | $ | 385 | | |
| | | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.03 | | $ | 0.28 | | $ | 0.17 | | $ | 1.16 | | |
| | | | | | | | | | | | | | | | |
| ^(1)^ The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | ||||||||||||||
| ^(2)^ Income tax expense related to increases to the valuation allowance for certain deferred tax assets. | | ||||||||||||||
| ^(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 24, 2021
(UNAUDITED)
| | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Adjustments | | | | | ||||||||||
| | | | Acquisition- | | Restructuring | | | | | | | | |||||
| | | | Related | | and Other | | | | | | Adjusted | | |||||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | Other Items^(1)(2)^ | **** | Tax Items^(3)^ | **** | (Non-GAAP) ^(4)^ | | |||||
| | | ||||||||||||||||
| Operating income: | | | | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 18 | | $ | 135 | | $ | — | | $ | — | | $ | 1,679 | |
| Industrial Solutions | | | | 15 | | | 73 | | | — | | | — | | | 557 | |
| Communications Solutions | | | | 1 | | | 25 | | | — | | | — | | | 465 | |
| Total | | | $ | 34 | | $ | 233 | | $ | — | | $ | — | | $ | 2,701 | |
| | | | | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | | | | 18.1 | % |
| | | | | | | | | | | | | | | | | | |
| Other income (expense), net | | | $ | — | | $ | — | | $ | 28 | | $ | — | | $ | 11 | |
| | | | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (7) | | $ | (35) | | $ | (6) | | $ | (333) | | $ | (504) | |
| | | | | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | | | | 18.9 | % |
| | | | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 27 | | $ | 198 | | $ | 22 | | $ | (333) | | $ | 2,169 | |
| | | | | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.08 | | $ | 0.59 | | $ | 0.07 | | $ | (1.00) | | $ | 6.51 | |
| | | | | | | | | | | | | | | | | | |
| (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | ||||||||||||||||
| (2) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract. | | ||||||||||||||||
| (3) Represents a 327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and expected future operating profit and taxable income, 29 million of income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets, and 23 million of income tax expense associated with the tax impacts of an intercompany transaction. | | ||||||||||||||||
| (4) See description of non-GAAP financial measures. | |
All values are in US Dollars.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Year Ended September 25, 2020
(UNAUDITED)
| | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Adjustments | | | | | ||||||||||
| | | | Acquisition- | | Restructuring | | | | | | | | |||||
| | | | Related | | and Other | | Impairment | | | | Adjusted | | |||||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | of Goodwill ^(1)^ | **** | Tax Items^(2)^ | **** | (Non-GAAP) ^(4)^ | | |||||
| | | ||||||||||||||||
| Operating income (loss): | | | | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 32 | | $ | 113 | | $ | 900 | | $ | — | | $ | 952 | |
| Industrial Solutions | | | | 8 | | | 102 | | | — | | | — | | | 522 | |
| Communications Solutions | | | | — | | | 42 | | | — | | | — | | | 260 | |
| Total | | | $ | 40 | | $ | 257 | | $ | 900 | | $ | — | | $ | 1,734 | |
| | | | | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | | | | 14.2 | % |
| | | | | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | — | | $ | (8) | | $ | 12 | |
| | | | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (8) | | $ | (46) | | $ | (4) | | $ | 550 | | $ | (291) | |
| | | | | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | | | | 17.0 | % |
| | | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | | $ | 32 | | $ | 211 | | $ | 896 | | $ | 542 | | $ | 1,422 | |
| | | | | | | | | | | | | | | | | | |
| Diluted earnings (loss) per share from continuing operations (3) | | | $ | 0.10 | | $ | 0.63 | | $ | 2.68 | | $ | 1.62 | | $ | 4.26 | |
| | | | | | | | | | | | | | | | | | |
| (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 355 million of income tax expense related to the tax impacts of certain measures of Swiss tax reform and 226 million of income tax expense related to increases to the valuation allowance for certain deferred tax assets, partially offset by a 31 million income tax benefit related to pre-separation tax matters and the termination of the tax sharing agreement with Tyco International and Covidien. | | ||||||||||||||||
| (3) U.S. GAAP diluted shares excludes two million of nonvested share awards and options outstanding as the inclusion of these securities would have been antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares. | | ||||||||||||||||
| (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 December 25, 2020
(UNAUDITED)
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | Adjustments | | | | | |||||||
| | | | | Acquisition- | | Restructuring | | | | | | ||||
| | | | | Related | | and Other | | | | Adjusted | | ||||
| | U.S. GAAP | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | Tax Items ^(2)^ | **** | (Non-GAAP) ^(3)^ | | ||||
| | ( in millions, except per share data) | | |||||||||||||
| Operating income: | | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 5 | | $ | 118 | | $ | — | | $ | 431 | | |
| Industrial Solutions | | | | | 4 | | | 38 | | | — | | | 118 | |
| Communications Solutions | | | | | — | | | 11 | | | — | | | 75 | |
| Total | | | $ | 9 | | $ | 167 | | $ | — | | $ | 624 | | |
| | | | | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | | | | 17.7 | % |
| | | | | | | | | | | | | | | | |
| Other expense, net | | | $ | — | | $ | — | | $ | — | | $ | (1) | | |
| | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (2) | | $ | (32) | | $ | (29) | | $ | (123) | | |
| | | | | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | | | | 20.1 | % |
| | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 7 | | $ | 135 | | $ | (29) | | $ | 488 | | |
| | | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.02 | | $ | 0.41 | | $ | (0.09) | | $ | 1.47 | | |
| | | | | | | | | | | | | | | | |
| ^(1)^ The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | ||||||||||||||
| ^(2)^ Income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets. | | ||||||||||||||
| ^(3)^ See description of non-GAAP financial measures. | |
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 October 27, 2021
(UNAUDITED)
| | | | |
|---|---|---|---|
| | Outlook for | | |
| | Quarter Ending | | |
| | December 24, | | |
| | 2021 | | |
| Diluted earnings per share from continuing operations | $ | 1.50 | |
| Restructuring and other charges, net | | 0.12 | |
| Acquisition-related charges | | 0.03 | |
| Tax items | | (0.05) | |
| Adjusted diluted earnings per share from continuing operations ^(1)^ | $ | 1.60 | |
| | | | |
| | | | |
| Net sales growth | | 5.0 | % |
| Translation | | 0.6 | |
| (Acquisitions) divestitures, net | | (1.5) | |
| Organic net sales growth ^(1)^ | | 4.1 | % |
| | | | |
| ^(1)^ See description of non-GAAP financial measures. |
Exhibit 99.2
| EVERY CONNECTION COUNTS<br>TE Connectivity<br>Fourth Quarter<br>2021 Earnings<br>October 27, 2021 |
|---|
| 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-<br>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; developments<br>in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the<br>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<br>to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and<br>cannot be predicted. Such developments may include the geographic spread of the virus, the severity of the virus, the duration of the<br>outbreak, the impact on our suppliers’ and customers’ supply chains, the actions that may be taken by various governmental authorities in<br>response to the outbreak in jurisdictions in which we operate, and the possible impact on the global economy and local economies in which<br>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<br>fiscal year ended Sept. 25, 2020 as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us<br>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.<br>Forward-Looking Statements<br>and Non-GAAP Financial Measures<br>2 |
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| Earnings Highlights<br>Strong Q4 Sales & Adjusted EPS above expectations despite broader supply challenges<br>• Sales of $3.8B, up 17% Y/Y; Adjusted EPS of $1.69, up 46% Y/Y<br>• Strong order levels of $4.1B; book to bill of 1.08<br>• Adjusted Operating Margins of 18.5%, with strong operational performance in all segments<br>• Generated Free Cash Flow of ~$535M; ~$475M returned to shareholders and ~$300M for M&A<br>FY21 results demonstrate strong execution & strength and diversity of our portfolio<br>• Sales of $14.9B, up 23% Y/Y, with benefits from secular trends across our business, including EV,<br>data centers, & factory automation<br>• Adjusted Operating Margins of 18.1%, up ~400bps Y/Y, with expansion in each segment<br>• Adjusted EPS of $6.51, up over 50% Y/Y, driven by strong operational performance<br>• Free Cash Flow ~$2.1B with ~100% conversion and 75% returned to shareholders & 20% for M&A<br>• Continue to drive ESG initiatives while enabling sustainable applications for our customers<br>Q1 Guidance<br>• Expect sales of ~$3.7B, up 5% reported Y/Y and Adjusted EPS of ~$1.60, up 9% Y/Y<br>• Expect continued strong performance despite auto production declines in Q1<br>Adjusted EPS, Adjusted Operating Margin , Free Cash Flow, and Free Cash Flow Conversion are non-GAAP financial measures; see Appendix for descriptions and reconciliations 3 |
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| Reported FY20 FY21 FY21 Q4 Growth<br>Q4 Q3 Q4 Y/Y Q/Q<br>Transportation 2,124 2,562 2,349 11% (8)%<br>Industrial 799 1,218 1,140 43% (6)%<br>Communications 425 755 647 52% (14)%<br>Total TE 3,348 4,535 4,136 24% (9)%<br>Book to Bill 1.03 1.18 1.08<br>Segment Orders Summary<br>($ in millions)<br>4<br>• Y/Y orders growth in all<br>segments and regions<br>• Book to bill remains strong<br>in each segment<br>• Order patterns as<br>expected, with strong<br>backlog position entering<br>FY22<br>Strong Orders Growth Y/Y with 1.08 Book to Bill |
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| Transportation Solutions<br>$1,865 $2,198<br>Q4 2020 Q4 2021<br>• Automotive growth despite production declines.<br>Continue to benefit from content trends of<br>electronification and electric vehicle adoption<br>• Commercial Transportation strong market<br>outperformance with growth across all regions and<br>market verticals<br>• Sensors growth primarily driven by transportation<br>applications, with new program ramps<br>Y/Y Growth Rates Reported Organic<br>Automotive $1,520 14% 12%<br>Commercial<br>Transportation 372 40% 38%<br>Sensors 306 16% 15%<br>Transportation<br>Solutions $2,198 18% 16%<br>Q4 Sales Q4 Business Performance<br>Q4 Adjusted Operating Margin<br>$ in Millions<br>Reported<br>Up 18%<br>Organic<br>Up 16%<br>Margin expansion<br>driven by higher<br>volume and strong<br>operational<br>performance<br>Adjusted EBITDA Margin 19.6% 23.2%<br>5<br>13.1%<br>18.0%<br>Q4 2020 Q4 2021<br>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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| Industrial Solutions<br>$959 $1,017<br>Q4 2020 Q4 2021<br>Y/Y Growth Rates Reported Organic<br>Industrial Equipment $386 33% 32%<br>Aerospace, Defense<br>and Marine 258 (17)% (18)%<br>Energy 194 3% 8%<br>Medical 179 5% 5%<br>Industrial Solutions $1,017 6% 6%<br>Margin expansion<br>driven by strong<br>operational<br>performance<br>13.9% 15.9%<br>Q4 2020 Q4 2021<br>Adjusted EBITDA Margin 18.6% 20.6%<br>• Industrial Equipment double-digit growth in all regions,<br>with continued benefits from increased capital<br>investment in factory automation applications<br>• AD&M decline driven by market weakness<br>• Energy organic growth driven by momentum in<br>renewable applications<br>• Medical growth due to recovery in interventional<br>procedures<br>$ in Millions<br>Q4 Sales Q4 Business Performance<br>Q4 Adjusted Operating Margin<br>Reported<br>Up 6%<br>Organic<br>Up 6%<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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| $437<br>$603<br>Q4 2020 Q4 2021<br>Reported<br>Up 38%<br>Organic<br>Up 36%<br>Y/Y Growth Rates Reported Organic<br>Data & Devices $357 37% 36%<br>Appliances 246 39% 36%<br>Communications<br>Solutions $603 38% 36%<br>•Data & Devices performance continues to be driven<br>by content growth and share gains in high-speed<br>cloud applications<br>• Appliances double-digit growth in all regions, with<br>continued share gains<br>21.7%<br>24.7%<br>Q4 2020 Q4 2021<br>Continued strong<br>operational execution<br>and higher volumes<br>driving record margin<br>performance<br>Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non-GAAP financial measures: see Appendix for descriptions and reconciliations<br>Communications Solutions<br>Q4 Sales<br>Q4 Adjusted Operating Margin<br>Q4 Business Performance<br>$ in Millions<br>Adjusted EBITDA Margin 25.4% 27.5%<br>7 |
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| Q4 Financial Summary<br>($ in Millions, except per share amounts) Q4 FY20 Q4 FY21<br>Net Sales $ 3,261 $ 3,818<br>Operating Income $ 347 $ 660<br>Operating Margin 10.6% 17.3%<br>Acquisition-Related Charges 13 8<br>Restructuring & Other Charges, Net 113 38<br>Adjusted Operating Income $ 473 $ 706<br>Adjusted Operating Margin 14.5% 18.5%<br>Earnings Per Share* $ 0.69 $ 2.40<br>Acquisition-Related Charges 0.03 0.02<br>Restructuring & Other Charges, Net 0.28 0.12<br>Other Items - 0.07<br>Tax Items 0.17 (0.92)<br>Adjusted EPS $ 1.16 $ 1.69<br>* Represents Diluted Earnings (Loss) Per Share from Continuing Operations.<br>..<br>Adjusted Operating Income, Adjusted Operating Margin and Adjusted EPS are non-GAAP financial measures; see Appendix for descriptions and reconciliations. 8 |
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| Financial Performance<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>Free Cash Flow Adjusted EPS<br>Demonstrating the Strength and Diversity of Our Portfolio<br>and Performance above Pre-Covid Levels on Strong Execution<br>9<br>$1,616 $1,482<br>$2,081<br>FY19 FY20 FY21<br>$ in Millions<br>$ in Millions<br>$13,448 $12,172 $14,923<br>FY19 FY20 FY21<br>$5.55 $4.26<br>$6.51<br>FY19 FY 20 FY 21<br>17.0%<br>14.2%<br>18.1%<br>FY19 FY20 FY21<br>Adjusted<br>EBITDA<br>Margin<br>22.1% 20.1% 23.3%<br>+23%<br>vs FY20<br>+390bps<br>vs FY20<br>+53%<br>vs FY20<br>+40%<br>vs FY20<br>~100%<br>conversion<br>+11%<br>vs FY19<br>+110bps<br>vs FY19<br>+17%<br>vs FY19 |
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| EVERY CONNECTION COUNTS<br>Additional<br>Information |
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| Y/Y Q4 2021<br>Adjusted EPS is a non-GAAP financial measure; See Appendix for description and reconciliation.<br>Sales<br>(in millions)<br>Adjusted EPS<br>Q4 2020 Results $3,261 $1.16<br>Operational Performance 506 0.60<br>FX Impact 51 -<br>Tax Rate Impact -(0.07)<br>Q4 2021 Results $3,818 $1.69<br>11 |
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| Y/Y FY 2021<br>Adjusted EPS is a non-GAAP financial measure; See Appendix for description and reconciliation.<br>Sales<br>(in millions)<br>Adjusted EPS<br>2020 Results $12,172 $4.26<br>Operational Performance 2,307 2.26<br>FX Impact 444 0.14<br>Tax Rate Impact -(0.15)<br>2021 Results $14,923 $6.51<br>12 |
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| Y/Y Q1 2022<br>Adjusted EPS is a non-GAAP financial measure; See Appendix for description and reconciliation.<br>Sales<br>(in millions)<br>Adjusted EPS<br>Q1 2021 Results $3,522 $1.47<br>Operational Performance 197 0.10<br>FX Impact (19) 0.01<br>Tax Rate Impact - 0.02<br>Q1 2022 Guidance $3,700 $1.60<br>13 |
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| ($ in Millions) FY20 FY21<br>Beginning Cash Balance $927 $945<br>Free Cash Flow 1,482 2,081<br>Dividends (625) (647)<br>Share repurchases (523) (831)<br>Net increase (decrease) in debt 22 (47)<br>Acquisition of businesses, net of cash<br>acquired (339) (423)<br>Other 1 125<br>Ending Cash Balance $945 $1,203<br>Total Debt $4,146 $4,092 A/R $2,377 $2,928<br>Days Sales Outstanding* 66 69<br>Inventory $1,950 $2,511<br>Days on Hand* 74 86<br>Accounts Payable $1,276 $1,911<br>Days Outstanding* 50 67<br>Free Cash Flow and Working Capital Liquidity, Cash and Debt<br>($ in Millions) FY20 FY21<br>Cash from Continuing Operating<br>Activities $1,991 $2,676<br>Capital expenditures (560) (690)<br>Proceeds from sales of property, plant<br>and equipment 17 86<br>Cash paid pursuant to collateral<br>requirements related to cross-currency<br>swap contracts<br>34 9<br>Free Cash Flow $1,482 $2,081<br>Free Cash Flow is a non-GAAP financial measure, see Appendix for description and reconciliation<br>* Calculated on a quarterly basis and adjusted to exclude the impact of acquisitions<br>Balance Sheet & Cash Flow Summary<br>14 |
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| EVERY CONNECTION COUNTS<br>Appendix |
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| 16<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 (Loss) and Adjusted Operating Margin – represent operating income (loss) and operating margin, respectively, (the most comparable GAAP<br>financial measures) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if any.<br>We utilize these adjusted measures in combination with operating income (loss) and operating margin to assess segment level operating performance and to provide insight<br>to management in evaluating segment operating plan execution and market conditions. Adjusted Operating Income (Loss) is a significant component in our incentive<br>compensation 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 (Loss) from Continuing Operations – represents income (loss) from continuing operations (the most comparable GAAP financial measure) before special<br>items including restructuring and other charges, acquisition-related charges, impairment of goodwill, tax sharing income related to adjustments to prior period tax returns<br>and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects.<br>• Adjusted Earnings (Loss) Per Share – represents diluted earnings (loss) per share from continuing operations (the most comparable GAAP financial measure) before<br>special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, tax sharing income related to adjustments to prior period tax<br>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<br>component in our incentive compensation plans. |
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| 17<br>• Adjusted EBITDA and Adjusted EBITDA Margin - represent net income (loss) and net income (loss) as a percentage of net sales, respectively, (the most comparable GAAP<br>financial measures) before interest expense, interest income, income taxes, depreciation, and amortization, as adjusted for net other income, income from discontinued<br>operations, and special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if any.<br>• Free Cash Flow (FCF) – is a useful measure of our ability to generate cash. The difference between net cash provided by continuing operating activities (the most<br>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<br>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<br>generated from our operations. Free Cash Flow is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cash<br>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<br>by economic financing decisions rather than operating activity. Certain special items, including net payments related to pre-separation tax matters and cash paid (collected)<br>pursuant to collateral requirements related to cross-currency swap contracts, are also excluded by management in evaluating Free Cash Flow. Net capital expenditures<br>consist of capital expenditures less proceeds from the sale of property, plant, and equipment. These items are subtracted because they represent long-term commitments.<br>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<br>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<br>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<br>payments. In addition, we may have other discretionary expenditures, such as discretionary dividends, share repurchases, and business acquisitions, that are not<br>considered in the calculation of Free Cash Flow.<br>• Free Cash Flow Conversion – represents the ratio of Free Cash Flow to Adjusted Income (Loss) from Continuing Operations. We use Free Cash Flow Conversion as an<br>indicator of our ability to convert earnings to cash.<br>Non-GAAP Financial Measures (cont.) |
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| Segment Summary<br>18<br><br><br>Transportation Solutions $ 2,198 $ 1,865 $ 8,974 $ 6,845<br>Industrial Solutions 1,017 959 3,844 3,713<br>Communications Solutions 603 437 2,105 1,614<br>Total $ 3,818 $ 3,261 $ 14,923 $ 12,172<br>Transportation Solutions $ 387 17.6 % $ 198 10.6 % $ 1,526 17.0 % $ (93) (1.4) %<br>Industrial Solutions 134 13.2 85 8.9 469 12.2 412 11.1<br>Communications Solutions 139 23.1 64 14.6 439 20.9 218 13.5<br>Total $ 660 17.3 % $ 347 10.6 % $ 2,434 16.3 % $ 537 4.4 %<br>Transportation Solutions $ 395 18.0 % $ 245 13.1 % $ 1,679 18.7 % $ 952 13.9 %<br>Industrial Solutions 162 15.9 133 13.9 557 14.5 522 14.1<br>Communications Solutions 149 24.7 95 21.7 465 22.1 260 16.1<br>Total $ 706 18.5 % $ 473 14.5 % $ 2,701 18.1 % $ 1,734 14.2 %<br>2021<br>For the Years Ended<br>2020<br>For the Quarters Ended<br>September 24, September 25, September 24, September 25,<br>Net Sales<br>Operating<br>Income (Loss)<br>Operating<br>Margin<br>Net Sales Net Sales Net Sales<br>Income (1)<br>Adjusted<br>Operating<br>Income (1)<br>Income<br>Operating Operating<br>Income<br>Operating<br>Income<br>Adjusted<br>Operating<br>Margin (1)<br>(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures.<br>2021 2020<br>($ in millions)<br>Operating<br>Margin (1)<br>Adjusted<br>Operating<br>Margin (1)<br>Adjusted<br>Operating<br>Income (1)<br>Adjusted<br>Operating<br>Adjusted<br>Operating<br>Adjusted<br>Operating<br>Margin (1)<br>Adjusted<br>Income (1)<br>Operating<br>Margin<br>Operating<br>Margin<br>Operating<br>Margin |
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| Reconciliation of Net Sales Growth<br>19<br><br>Transportation Solutions (3):<br>Automotive $ 184 13.8 % $ 160 11.7 % $ 24 $ —<br>Commercial transportation 106 39.8 103 37.9 3 —<br>Sensors 43 16.3 38 15.4 5 —<br>Total 333 17.9 301 16.0 32 —<br>Industrial Solutions (3):<br>Industrial equipment 96 33.1 91 31.5 5 —<br>Aerospace, defense, oil, and gas (51) (16.5) (57) (18.1) 4 2<br>Energy 5 2.6 15 7.7 — (10)<br>Medical 8 4.7 8 4.7 — —<br>Total 58 6.0 57 6.2 9 (8)<br>Communications Solutions (3):<br>Data and devices 97 37.3 91 35.5 6 —<br>Appliances 69 39.0 65 35.7 4 —<br>Total 166 38.0 156 35.6 10 —<br>Total $ 557 17.1 % $ 514 15.8 % $ 51 $ (8)<br>Transportation Solutions (3):<br>Automotive $ 1,476 30.1 % $ 1,243 25.0 % $ 233 $ —<br>Commercial transportation 416 39.6 377 35.2 39 —<br>Sensors 237 26.6 119 13.4 29 89<br>Total 2,129 31.1 1,739 25.1 301 89<br>Industrial Solutions (3):<br>Industrial equipment 299 27.2 253 22.7 46 —<br>Aerospace, defense, oil, and gas (166) (13.8) (209) (17.4) 25 18<br>Energy 21 2.9 30 4.1 20 (29)<br>Medical (23) (3.3) (25) (3.6) 2 —<br>Total 131 3.5 49 1.3 93 (11)<br>Communications Solutions (3):<br>Data and devices 225 23.1 199 20.5 26 —<br>Appliances 266 41.5 242 37.2 24 —<br>Total 491 30.4 441 27.2 50 —<br>Total $ 2,751 22.6 % $ 2,229 18.2 % $ 444 $ 78<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 deems necessary.<br>($ in millions)<br>Net Sales<br>Growth (Decline)<br>Organic Net Sales<br>Growth (Decline) (1)<br>Change in Net Sales for the Quarter Ended September 24, 2021<br>versus Net Sales for the Quarter Ended September 25, 2020<br>Net Sales Organic Net Sales Acquisitions/<br>Growth (Decline) Growth (Decline) (1) Translation (2) (Divestitures)<br>Change in Net Sales for the Year Ended September 24, 2021<br>versus Net Sales for the Year Ended September 25, 2020<br>($ in millions)<br>Translation (2)<br>Acquisition/<br>(Divestitures) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended September 24, 2021<br>20<br><br>Operating income:<br>Transportation Solutions $ 387 $ 3 $ 5 $ — $ — $ 395<br>Industrial Solutions 134 4 24 — — 162<br>Communications Solutions 139 1 9 — — 149<br>Total $ 660 $ 8 $ 38 $ — $ — $ 706<br>Operating margin 17.3 % 18.5 %<br>Other income (expense), net $ (22) $ — $ — $ 28 $ — $ 6<br>Income tax (expense) benefit $ 167 $ (1) $ 3 $ (6) $ (304) $ (141)<br>Effective tax rate (26.6) % 20.1 %<br>Income from continuing operations $ 794 $ 7 $ 41 $ 22 $ (304) $ 560<br>Diluted earnings per share from<br>continuing operations $ 2.40 $ 0.02 $ 0.12 $ 0.07 $ (0.92) $ 1.69<br><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 in effect for each such<br>jurisdiction.<br>U.S. GAAP Charges (1) (Non-GAAP) (4) Charges, Net (1) Tax Items (3)<br>($ in millions, except per share data)<br>Other Items (1)(2)<br>(3) Represents a $327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current<br>and expected future operating profit and taxable income, and $23 million of income tax expense associated with the tax impacts of an intercompany transaction.<br>(2) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract.<br>Adjustments<br>and Other Adjusted Related<br>Acquisition- Restructuring |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended September 25, 2020<br>21<br><br>Operating income:<br>Transportation Solutions $ 198 $ 11 $ 36 $ — $ 245<br>Industrial Solutions 85 2 46 — 133<br>Communications Solutions 64 — 31 — 95<br>Total $ 347 $ 13 $ 113 $ — $ 473<br>Operating margin 10.6 % 14.5 %<br>Income tax expense $ (109) $ (4) $ (21) $ 56 $ (78)<br>Effective tax rate 32.3 % 16.8 %<br>Income from continuing operations $ 228 $ 9 $ 92 $ 56 $ 385<br>Diluted earnings per share from continuing operations $ 0.69 $ 0.03 $ 0.28 $ 0.17 $ 1.16<br>Adjustments<br>Adjusted and Other<br>Restructuring Acquisition-<br>Related<br>Charges (1)<br>(3) See description of non-GAAP financial measures.<br>(2) Income tax expense related to increases to the valuation allowance for certain deferred tax assets.<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.<br>U.S. GAAP (Non-GAAP) (3)<br>($ in millions, except per share data)<br>Charges, Net (1) Tax Items (2) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Year Ended September 24, 2021<br>22<br><br>Operating income:<br>Transportation Solutions $ 1,526 $ 18 $ 135 $ — $ — $ 1,679<br>Industrial Solutions 469 15 73 — — 557<br>Communications Solutions 439 1 25 — — 465<br>Total $ 2,434 $ 34 $ 233 $ — $ — $ 2,701<br>Operating margin 16.3 % 18.1 %<br>Other income (expense), net $ (17) $ — $ — $ 28 $ — $ 11<br>Income tax expense $ (123) $ (7) $ (35) $ (6) $ (333) $ (504)<br>Effective tax rate 5.2 % 18.9 %<br>Income from continuing operations $ 2,255 $ 27 $ 198 $ 22 $ (333) $ 2,169<br>Diluted earnings per share from<br>continuing operations $ 6.77 $ 0.08 $ 0.59 $ 0.07 $ (1.00) $ 6.51<br>Adjustments<br>Acquisition- Restructuring<br>Related and Other Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1) Tax Items (3) (Non-GAAP) (4) Other Items (1)(2)<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 in effect for each such<br>jurisdiction.<br>(3) Represents a $327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current<br>and expected future operating profit and taxable income, $29 million of income tax benefits related to an Internal Revenue Service approved change in the tax method of<br>depreciating or amortizing certain assets, and $23 million of income tax expense associated with the tax impacts of an intercompany transaction.<br>(2) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract. |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Year Ended September 25, 2020<br>23<br><br>Operating income (loss):<br>Transportation Solutions $ (93) $ 32 $ 113 $ 900 $ — $ 952<br>Industrial Solutions 412 8 102 — — 522<br>Communications Solutions 218 — 42 — — 260<br>Total $ 537 $ 40 $ 257 $ 900 $ — $ 1,734<br>Operating margin 4.4 % 14.2 %<br>Other income, net $ 20 $ — $ — $ — $ (8) $ 12<br>Income tax expense $ (783) $ (8) $ (46) $ (4) $ 550 $ (291)<br>Effective tax rate 149.4 % 17.0 %<br>Income (loss) from continuing operations $ (259) $ 32 $ 211 $ 896 $ 542 $ 1,422<br>Diluted earnings (loss) per share from<br>continuing operations (3) $ (0.78) $ 0.10 $ 0.63 $ 2.68 $ 1.62 $ 4.26<br>Adjustments<br>Acquisition- Restructuring<br>Related and Other Impairment Adjusted<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.<br>(2) Includes $355 million of income tax expense related to the tax impacts of certain measures of Swiss tax reform and $226 million of income tax expense related to increases<br>to the valuation allowance for certain deferred tax assets, partially offset by a $31 million income tax benefit related to pre-separation tax matters and the termination of the tax<br>sharing agreement with Tyco International and Covidien.<br>U.S. GAAP<br>(3) U.S. GAAP diluted shares excludes two million of nonvested share awards and options outstanding as the inclusion of these securities would have been antidilutive because<br>of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares.<br>(4) See description of non-GAAP financial measures.<br>($ in millions, except per share data)<br>Charges (1) Charges, Net (1) of Goodwill (1) Tax Items (2) (Non-GAAP) (4) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended December 25, 2020<br>24<br><br>Operating income:<br>Transportation Solutions $ 308 $ 5 $ 118 $ — $ 431<br>Industrial Solutions 76 4 38 — 118<br>Communications Solutions 64 — 11 — 75<br>Total $ 448 $ 9 $ 167 $ — $ 624<br>Operating margin 12.7 % 17.7 %<br>Other expense, net $ (1) $ — $ — $ — $ (1)<br>Income tax expense $ (60) $ (2) $ (32) $ (29) $ (123)<br>Effective tax rate 13.8 % 20.1 %<br>Income from continuing operations $ 375 $ 7 $ 135 $ (29) $ 488<br>Diluted earnings per share from continuing operations $ 1.13 $ 0.02 $ 0.41 $ (0.09) $ 1.47<br>Adjusted<br>(Non-GAAP) (3)<br>($ in millions, except per share data)<br>Tax Items (2)<br>and Other<br>Charges, Net (1)<br>(3) See description of non-GAAP financial measures.<br>U.S. GAAP<br>Acquisition-<br>Related<br>Charges (1)<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.<br>(2) Income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets.<br>Restructuring |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Year Ended September 27, 2019<br>25<br><br>Operating income:<br>Transportation Solutions $ 1,226 $ 31 $ 144 $ - $ 1,401<br>Industrial Solutions 543 15 63 - 621<br>Communications Solutions 209 1 48 - 258<br>Total $ 1,978 $ 47 $ 255 $ - $ 2,280<br>Operating margin 14.7 % 17.0 %<br>Other income, net $ 2 $ - $ - $ - $ 2<br>Income tax (expense) benefit $ 15 $ (9) $ (61) $ (291) $ (346)<br>Effective tax rate (0.8) % 15.5 %<br>Income from continuing operations $ 1,946 $ 38 $ 194 $ (291) $ 1,887<br>Diluted earnings per share from<br>continuing operations $ 5.72 $ 0.11 $ 0.57 $ (0.86) $ 5.55<br>Adjustments<br>Acquisition-<br>Related Charges Restructuring<br>and Other and Other Adjusted<br>U.S. GAAP Items (1)(2) Charges, Net (1) Tax Items (3) (Non-GAAP) (4)<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 in effect for each such<br>jurisdiction.<br>(2) Includes acquisition-related charges of $30 million and a write-off of spare parts of $17 million.<br>(3) Includes a $216 million income tax benefit related to the tax impacts of certain measures of Swiss tax reform, a $90 million income tax benefit related to the effective<br>settlement of a tax audit in a non-U.S. jurisdiction, and $15 million of income tax expense associated with the tax impacts of certain legal entity restructurings and<br>intercompany transactions.<br>(4) 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<br>Net cash provided by continuing operating activities $ 774 $ 719 $ 2,676 $ 1,991 $ 2,454<br>Net cash provided by (used in) discontinued operating activities — 1 — 1 (32)<br>774 720 2,676 1,992 2,422<br>Net cash used in investing activities (540) (117) (1,037) (865) (692)<br>Net cash used in financing activities (443) (135) (1,386) (1,105) (1,643)<br>Effect of currency translation on cash (4) 3 5 (4) (8)<br>Net increase (decrease) in cash, cash equivalents, and restricted cash $ (213) $ 471 $ 258 $ 18 $ 79<br>Net cash provided by continuing operating activities $ 774 $ 719 $ 2,676 $ 1,991 $ 2,454<br>Excluding:<br>Cash (collected) paid pursuant to collateral requirements related<br>to cross-currency swap contracts (3) 39 9 34 (132)<br>Capital expenditures, net (235) (110) (604) (543) (706)<br>Free cash flow (1) $ 536 $ 648 $ 2,081 $ 1,482 $ 1,616<br>For the Quarters Ended<br>September 24, September 25, September 24, September 25,<br>For the Years Ended<br>(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.<br>2021 2020 2021 2020<br>(in millions)<br>September 27,<br>2019 |
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| Free Cash Flow Conversion<br>27<br>Free cash flow (1) $ 2,081<br>Adjusted income from continuing operations (1) $ 2,169<br>Free cash flow conversion (1) 95.9 %<br>For the Year Ended<br>September 24,<br>2021<br>($ in millions)<br>(1) See description of non-GAAP financial measures. |
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| Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin<br>28<br>Net income (loss) $ 794 $ 580 $ 230 $ 2,261 $ (241) $ 1,844<br>(Income) loss from discontinued operations — 1 (2) (6) (18) 102<br>Income tax expense (benefit) (167) 124 109 123 783 (15)<br>Other (income) expense, net 22 (2) — 17 (20) (2)<br>Interest expense 14 14 12 56 48 68<br>Interest income (3) (3) (2) (17) (15) (19)<br>Operating income 660 714 347 2,434 537 1,978<br>Acquisition-related charges and other items 8 9 13 34 40 47<br>Restructuring and other charges, net 38 11 113 233 257 255<br>Impairment of goodwill — — — — 900 —<br>Adjusted operating income (1) 706 734 473 2,701 1,734 2,280<br>Depreciation and amortization (2) 179 210 181 769 711 687<br>Adjusted EBITDA (1) $ 885 $ 944 $ 654 $ 3,470 $ 2,445 $ 2,967<br>Net sales $ 3,818 $ 3,845 $ 3,261 $ 14,923 $ 12,172 $ 13,448<br>Net income (loss) as a percentage of net sales 20.8 % 15.1 % 7.1 % 15.2 %(2.0) % 13.7 %<br>Adjusted EBITDA margin (1) 23.2 % 24.6 % 20.1 % 23.3 % 20.1 % 22.1 %<br>Operating income $ 387 $ 134 $ 139 $ 660 $ 198 $ 85 $ 64 $ 347<br>Acquisition-related charges 3 4 1 8 11 2 — 13<br>Restructuring and other charges, net 5 24 9 38 36 46 31 113<br>Adjusted operating income (1) 395 162 149 706 245 133 95 473<br>Depreciation and amortization 115 47 17 179 120 45 16 181<br>Adjusted EBITDA (1) $ 510 $ 209 $ 166 $ 885 $ 365 $ 178 $ 111 $ 654<br>Net sales $ 2,198 $ 1,017 $ 603 $ 3,818 $ 1,865 $ 959 $ 437 $ 3,261<br>Operating margin 17.6 % 13.2 % 23.1 % 17.3 % 10.6 % 8.9 % 14.6 % 10.6 %<br>Adjusted operating margin (1) 18.0 % 15.9 % 24.7 % 18.5 % 13.1 % 13.9 % 21.7 % 14.5 %<br>Adjusted EBITDA margin (1) 23.2 % 20.6 % 27.5 % 23.2 % 19.6 % 18.6 % 25.4 % 20.1 %<br>(2) Excludes non-cash amortization associated with fair value adjustments related to acquired customer order backlog of $3 million for the year ended September 27, 2019 as these charges are included in the acquisition-related charges and other items line.<br>Solutions<br>Communications<br>For the Quarters Ended<br>September 24, 2021 September 25, 2020<br>September 24,<br>2021 2021<br>June 26, September 25,<br>2020<br>For the Quarters Ended<br>September 25,<br>For the Years Ended<br>(1) See description of non-GAAP financial measures.<br>Communications<br>Solutions Total<br>($ in millions)<br>Total<br>Transportation<br>Solutions<br>Industrial<br>Solutions<br>September 24,<br>2021<br>($ in millions)<br>Solutions Solutions<br>Transportation Industrial<br>September 27,<br>2019 2020 |
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| Reconciliation of Forward-Looking Non-GAAP Financial Measures<br>to Forward-Looking GAAP Financial Measures<br>29<br>Diluted earnings per share from continuing operations $ 1.50<br>Restructuring and other charges, net 0.12<br>Acquisition-related charges 0.03<br>Tax items (0.05)<br>Adjusted diluted earnings per share from continuing operations (2) $ 1.60<br>Net sales growth 5.0 %<br>Translation 0.6<br>(Acquisitions) divestitures, net (1.5)<br>Organic net sales growth (2) 4.1 %<br>Effective tax rate 13.2 %<br>Effective tax rate adjustments (3) 5.8<br>Adjusted effective tax rate (2) 19.0 %<br>(3) Includes adjustments for special tax items and the tax effect of acquisition-related charges and net restructuring and other charges,<br>calculated based 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 October 27, 2021.<br>(2) See description of non-GAAP financial measures.<br>2021 (1)<br>December 24,<br>Outlook for<br>Fiscal 2022 (1)<br>Quarter Ending<br>Outlook for |
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