TE Connectivity plc 8-K, filed Apr 27, 2022
TE Connectivity plc (TEL)
About this 8-K
TE Connectivity plc filed this 8-K on April 27, 2022.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02. Results of Operations and Financial Condition
On April 27, 2022, TE Connectivity Ltd. (the “Company”) issued a press release reporting the Company’s second quarter results for fiscal 2022. 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 April 27, 2022 (see information in the press release attached hereto as Exhibit 99.1 under “Conference Call and Webcast”). A copy of the slide materials to be discussed at the conference call and webcast is being furnished pursuant to Regulation FD as Exhibit 99.2 and is incorporated herein by reference, and the slide materials also can be accessed at the “Investors” section of the Company’s website (www.te.com).
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit |
| Description |
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99.1 |
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99.2 |
| Presentation - TE Connectivity Q2 2022 Earnings Call (April 27, 2022) |
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104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Exhibit 99.1
NEWS RELEASE
te.com
TE Connectivity announces second quarter results for fiscal year 2022
Record sales and double-digit EPS growth driven by continued strong operational performance
SCHAFFHAUSEN, Switzerland – April 27, 2022 – TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal second quarter ended March 25, 2022.
Second Quarter Highlights
| ● | Net sales were $4.0 billion, up 7% on a reported basis and 8% organically year over year, with growth across all segments. |
| ● | Orders of $4.5 billion with a book to bill of 1.13, reflecting ongoing demand strength in all segments. |
| ● | GAAP diluted earnings per share (EPS) from continuing operations were $1.71, up 13% year over year, and adjusted EPS were $1.81, up 15% year over year. |
| ● | Cash flow from operating activities was $413 million, with approximately $670 million returned to shareholders. |
| ● | TE was named among the World’s Most Ethical Companies by Ethisphere for the eighth consecutive year. |
“I am very pleased with our strong second quarter performance and our global team’s execution in delivering record sales and double-digit EPS growth that exceeded our expectations,” said TE Connectivity CEO Terrence Curtin. “All three of our business segments – Transportation, Industrial and Communications – contributed and delivered sales growth year over year, demonstrating the strategic positioning of our portfolio, as we continue to benefit from our leadership position in long-term growth and sustainability trends. We continue to outperform the market in both automotive and commercial transportation due to our Transportation segment’s ongoing content growth and global design win momentum in electric vehicles. Our Communications segment is also seeing continued content growth in high-speed cloud applications and market share gains as we work with leading cloud customers on AI deployment and data center energy efficiencies. Our Industrial segment continues to demonstrate growth in factory automation applications and renewable energy applications where our technology is advancing sustainability initiatives. Our order trends remained strong through the quarter, and we expect to deliver year-over-year sales growth in the third quarter despite broader volatility in the macro environment.”
Third Quarter FY22 Outlook
For the third quarter of fiscal 2022, the company expects net sales of approximately $3.9 billion, reflecting an approximate 1% increase on a reported basis and an approximate 3% increase on an organic basis year over year. The company has included in its third quarter outlook an approximately 300 basis point year-over-year sales headwind from COVID-related shutdowns in China. GAAP EPS from continuing operations are expected to be approximately $1.71, with adjusted EPS of approximately $1.75, both down approximately 2% 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 April 27, 2022. |
About TE Connectivity
TE Connectivity Ltd. (NYSE: TEL) is a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of connectivity and sensor solutions, proven in the harshest environments, enable advancements in transportation, industrial applications, medical technology, energy, data communications, and the home. With more than 85,000 employees, including over 8,000 engineers, working alongside customers in approximately 140 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedIn, Facebook, WeChat and Twitter.
Non-GAAP Financial Measures
We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures provide supplemental information and
should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe that investors benefit from having access to the same financial measures that management uses in evaluating our operations. The primary limitation of these measures is that they exclude the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies.
The following provides additional information regarding our non-GAAP financial measures:
Forward-Looking Statements
This release contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements addressing our future financial condition and operating results, and the impact on our operations resulting from the coronavirus disease 2019 (“COVID-19”). Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, the extent, severity and duration of COVID-19 negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate, including continuing military conflict
between Russia and Ukraine resulting from Russia’s invasion of Ukraine or escalating tensions in surrounding countries; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the effects of Swiss tax reform. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. Such developments may include the geographic spread of the virus, the severity of the virus, the duration of the outbreak, the impact on our suppliers’ and customers’ supply chains, the actions that may be taken by various governmental authorities in response to the outbreak in jurisdictions in which we operate, and the possible impact on the global economy and local economies in which we operate. More detailed information about these and other factors is set forth in TE Connectivity Ltd.'s Annual Report on Form 10-K for the fiscal year ended Sept. 24, 2021 as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.
# # #
Contacts: | Media Relations: Rachel Quimby TE Connectivity 610-893-9593 Rachel.Quimby@te.com | Investor Relations: Sujal Shah TE Connectivity 610-893-9790 Sujal.Shah@te.com |
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| For the Quarters Ended | | For the Six Months Ended | ||||||||
| March 25, | | March 26, | | March 25, | | March 26, | ||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||
| (in millions, except per share data) | ||||||||||
Net sales | $ | 4,007 | | $ | 3,738 | | $ | 7,825 | | $ | 7,260 |
Cost of sales | | 2,670 | | | 2,528 | | | 5,258 | | | 4,904 |
Gross margin | | 1,337 | | | 1,210 | | | 2,567 | | | 2,356 |
Selling, general, and administrative expenses | | 416 | | | 401 | | | 779 | | | 762 |
Research, development, and engineering expenses | | 185 | | | 174 | | | 360 | | | 336 |
Acquisition and integration costs | | 10 | | | 6 | | | 18 | | | 14 |
Restructuring and other charges, net | | 21 | | | 17 | | | 33 | | | 184 |
Operating income | | 705 | | | 612 | | | 1,377 | | | 1,060 |
Interest income | | 4 | | | 8 | | | 6 | | | 11 |
Interest expense | | (18) | | | (13) | | | (30) | | | (28) |
Other income, net | | 5 | | | 4 | | | 20 | | | 3 |
Income from continuing operations before income taxes | | 696 | | | 611 | | | 1,373 | | | 1,046 |
Income tax expense | | (136) | | | (106) | | | (246) | | | (166) |
Income from continuing operations | | 560 | | | 505 | | | 1,127 | | | 880 |
Income (loss) from discontinued operations, net of income taxes | | — | | | 1 | | | (1) | | | 7 |
Net income | $ | 560 | | $ | 506 | | $ | 1,126 | | $ | 887 |
| | | | | | | | | | | |
Basic earnings per share: | | | | | | | | | | | |
Income from continuing operations | $ | 1.72 | | $ | 1.53 | | $ | 3.46 | | $ | 2.66 |
Income from discontinued operations | | — | | | — | | | — | | | 0.02 |
Net income | | 1.72 | | | 1.53 | | | 3.45 | | | 2.68 |
| | | | | | | | | | | |
Diluted earnings per share: | | | | | | | | | | | |
Income from continuing operations | $ | 1.71 | | $ | 1.51 | | $ | 3.44 | | $ | 2.64 |
Income from discontinued operations | | — | | | — | | | — | | | 0.02 |
Net income | | 1.71 | | | 1.51 | | | 3.43 | | | 2.66 |
| | | | | | | | | | | |
Weighted-average number of shares outstanding: | | | | | | | | | | | |
Basic | | 325 | | | 331 | | | 326 | | | 331 |
Diluted | | 327 | | | 334 | | | 328 | | | 333 |
TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| March 25, | | September 24, | ||
| 2022 | | 2021 | ||
| (in millions, except share data) | ||||
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | $ | 749 | | $ | 1,203 |
Accounts receivable, net of allowance for doubtful accounts of $50 and $41, respectively | | 3,068 | | | 2,928 |
Inventories | | 2,999 | | | 2,511 |
Prepaid expenses and other current assets | | 601 | | | 621 |
Total current assets | | 7,417 | | | 7,263 |
Property, plant, and equipment, net | | 3,817 | | | 3,778 |
Goodwill | | 5,463 | | | 5,590 |
Intangible assets, net | | 1,441 | | | 1,549 |
Deferred income taxes | | 2,466 | | | 2,499 |
Other assets | | 847 | | | 783 |
Total assets | $ | 21,451 | | $ | 21,462 |
Liabilities, redeemable noncontrolling interests, and shareholders' equity | | | | | |
Current liabilities: | | | | | |
Short-term debt | $ | 610 | | $ | 503 |
Accounts payable | | 1,986 | | | 1,911 |
Accrued and other current liabilities | | 2,450 | | | 2,242 |
Total current liabilities | | 5,046 | | | 4,656 |
Long-term debt | | 3,441 | | | 3,589 |
Long-term pension and postretirement liabilities | | 1,103 | | | 1,139 |
Deferred income taxes | | 185 | | | 181 |
Income taxes | | 318 | | | 302 |
Other liabilities | | 809 | | | 847 |
Total liabilities | | 10,902 | | | 10,714 |
Commitments and contingencies | | | | | |
Redeemable noncontrolling interests | | 107 | | | 114 |
Shareholders' equity: | | | | | |
Common shares, CHF 0.57 par value, 336,099,881 shares authorized and issued | | 148 | | | 148 |
Accumulated earnings | | 12,160 | | | 11,709 |
Treasury shares, at cost, 13,281,156 and 9,060,919 shares, respectively | | (1,769) | | | (1,055) |
Accumulated other comprehensive loss | | (97) | | | (168) |
Total shareholders' equity | | 10,442 | | | 10,634 |
Total liabilities, redeemable noncontrolling interests, and shareholders' equity | $ | 21,451 | | $ | 21,462 |
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| For the Quarters Ended | | For the Six Months Ended | ||||||||
| March 25, | | March 26, | | March 25, | | March 26, | ||||
| 2022 | | 2021 | | 2022 | | 2021 | ||||
| (in millions) | ||||||||||
Cash flows from operating activities: | | | | | | | | | | | |
Net income | $ | 560 | | $ | 506 | | $ | 1,126 | | $ | 887 |
(Income) loss from discontinued operations, net of income taxes | | — | | | (1) | | | 1 | | | (7) |
Income from continuing operations | | 560 | | | 505 | | | 1,127 | | | 880 |
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | | | | | | | | | | | |
Depreciation and amortization | | 194 | | | 193 | | | 392 | | | 380 |
Deferred income taxes | | 38 | | | (6) | | | 42 | | | (48) |
Non-cash lease cost | | 33 | | | 29 | | | 64 | | | 59 |
Provision for losses on accounts receivable and inventories | | 35 | | | 16 | | | 68 | | | 22 |
Share-based compensation expense | | 28 | | | 30 | | | 60 | | | 49 |
Other | | 13 | | | (41) | | | 4 | | | (20) |
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | | | | | | | | | | | |
Accounts receivable, net | | (205) | | | (268) | | | (57) | | | (567) |
Inventories | | (147) | | | (67) | | | (411) | | | (212) |
Prepaid expenses and other current assets | | (16) | | | 57 | | | 36 | | | (30) |
Accounts payable | | — | | | 161 | | | 15 | | | 510 |
Accrued and other current liabilities | | (20) | | | 37 | | | (305) | | | 125 |
Income taxes | | (7) | | | 17 | | | 27 | | | 34 |
Other | | (93) | | | (83) | | | (117) | | | 38 |
Net cash provided by operating activities | | 413 | | | 580 | | | 945 | | | 1,220 |
Cash flows from investing activities: | | | | | | | | | | | |
Capital expenditures | | (179) | | | (142) | | | (351) | | | (284) |
Proceeds from sale of property, plant, and equipment | | 9 | | | 57 | | | 63 | | | 58 |
Acquisition of businesses, net of cash acquired | | (2) | | | — | | | (102) | | | (107) |
Other | | (12) | | | 8 | | | 7 | | | 10 |
Net cash used in investing activities | | (184) | | | (77) | | | (383) | | | (323) |
Cash flows from financing activities: | | | | | | | | | | | |
Net decrease in commercial paper | | (479) | | | — | | | — | | | — |
Proceeds from issuance of debt | | 588 | | | 661 | | | 588 | | | 661 |
Repayment of debt | | (3) | | | (250) | | | (558) | | | (280) |
Proceeds from exercise of share options | | 8 | | | 44 | | | 30 | | | 119 |
Repurchase of common shares | | (404) | | | (140) | | | (708) | | | (259) |
Payment of common share dividends to shareholders | | (163) | | | (159) | | | (326) | | | (318) |
Other | | (7) | | | (5) | | | (38) | | | (24) |
Net cash provided by (used in) financing activities | | (460) | | | 151 | | | (1,012) | | | (101) |
Effect of currency translation on cash | | (2) | | | (4) | | | (4) | | | 7 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | | (233) | | | 650 | | | (454) | | | 803 |
Cash, cash equivalents, and restricted cash at beginning of period | | 982 | | | 1,098 | | | 1,203 | | | 945 |
Cash, cash equivalents, and restricted cash at end of period | $ | 749 | | $ | 1,748 | | $ | 749 | | $ | 1,748 |
| | | | | | | | | | | |
Supplemental cash flow information: | | | | | | | | | | | |
Interest paid on debt, net | $ | 17 | | $ | 29 | | $ | 29 | | $ | 33 |
Income taxes paid, net of refunds | | 106 | | | 96 | | | 177 | | | 181 |
TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
| For the Quarters Ended | | For the Six Months Ended | ||||||||
| March 25, | | March 26, | | March 25, | | March 26, | ||||
| 2022 | | 2021 | | 2022 | | 2021 | ||||
| (in millions) | ||||||||||
Net cash provided by operating activities | $ | 413 | | $ | 580 | | $ | 945 | | $ | 1,220 |
Excluding: | | | | | | | | | | | |
Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts | | (1) | | | (18) | | | (42) | | | 12 |
Capital expenditures, net | | (170) | | | (85) | | | (288) | | | (226) |
Free cash flow (1) | $ | 242 | | $ | 477 | | $ | 615 | | $ | 1,006 |
| | | | | | | | | | | |
(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures. | |||||||||||
TE CONNECTIVITY LTD.
CONSOLIDATED SEGMENT DATA (UNAUDITED)
| For the Quarters Ended | | | For the Six Months Ended | | ||||||||||||||||||
| March 25, | | | March 26, | | | March 25, | | | March 26, | | ||||||||||||
| 2022 | | | 2021 | | | 2022 | | | 2021 | | ||||||||||||
| ($ in millions) | | |||||||||||||||||||||
| Net Sales |
| | | | Net Sales |
| | | | Net Sales |
| | | | Net Sales |
| | | ||||
Transportation Solutions | $ | 2,314 | | | | | $ | 2,287 | | | | | $ | 4,472 | | | | | $ | 4,511 | | | |
Industrial Solutions | | 1,075 | | | | | | 952 | | | | | | 2,134 | | | | | | 1,825 | | | |
Communications Solutions | | 618 | | | | | | 499 | | | | | | 1,219 | | | | | | 924 | | | |
Total | $ | 4,007 | | | | | $ | 3,738 | | | | | $ | 7,825 | | | | | $ | 7,260 | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Operating | | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | ||||||||
| Income | | Margin | | Income | | Margin | | Income | | Margin | | Income | | Margin | ||||||||
Transportation Solutions | $ | 409 | | 17.7 | % | | $ | 398 | | 17.4 | % | | $ | 804 | | 18.0 | % | | $ | 706 | | 15.7 | % |
Industrial Solutions | | 148 | | 13.8 | | | | 111 | | 11.7 | | | | 271 | | 12.7 | | | | 187 | | 10.2 | |
Communications Solutions | | 148 | | 23.9 | | | | 103 | | 20.6 | | | | 302 | | 24.8 | | | | 167 | | 18.1 | |
Total | $ | 705 | | 17.6 | % | | $ | 612 | | 16.4 | % | | $ | 1,377 | | 17.6 | % | | $ | 1,060 | | 14.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted | | Adjusted | | Adjusted | | Adjusted | | Adjusted | | Adjusted | | Adjusted | | Adjusted | ||||||||
| Operating | | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | ||||||||
| Income (1) | | Margin (1) | | Income (1) | | Margin (1) | | Income (1) | | Margin (1) | | Income (1) | | Margin (1) | ||||||||
Transportation Solutions | $ | 422 | | 18.2 | % | | $ | 413 | | 18.1 | % | | $ | 814 | | 18.2 | % | | $ | 844 | | 18.7 | % |
Industrial Solutions | | 164 | | 15.3 | | | | 119 | | 12.5 | | | | 321 | | 15.0 | | | | 237 | | 13.0 | |
Communications Solutions | | 150 | | 24.3 | | | | 105 | | 21.0 | | | | 313 | | 25.7 | | | | 180 | | 19.5 | |
Total | $ | 736 | | 18.4 | % | | $ | 637 | | 17.0 | % | | $ | 1,448 | | 18.5 | % | | $ | 1,261 | | 17.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures. | | ||||||||||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NET SALES GROWTH (DECLINE) (UNAUDITED)
| Change in Net Sales for the Quarter Ended March 25, 2022 | ||||||||||||||||
| versus Net Sales for the Quarter Ended March 26, 2021 | ||||||||||||||||
| Net Sales | | | Organic Net Sales | | | | | Acquisitions/ | ||||||||
| Growth (Decline) | | | Growth (Decline) (1) | | | Translation (2) | | (Divestitures) | ||||||||
| ($ in millions) | ||||||||||||||||
Transportation Solutions (3): | | |
| | | | | |
| | | | | | | | |
Automotive | $ | 23 | | 1.4 | % | | $ | 80 | | 4.9 | % | | $ | (57) | | $ | — |
Commercial transportation | | 12 | | 3.1 | | | | 21 | | 5.4 | | | | (9) | | | — |
Sensors | | (8) | | (2.9) | | | | — | | — | | | | (8) | | | — |
Total | | 27 | | 1.2 | | | | 101 | | 4.5 | | | | (74) | | | — |
Industrial Solutions (3): | | | | | | | | | | | | | | | | | |
Industrial equipment | | 133 | | 39.2 | | | | 93 | | 27.2 | | | | (13) | | | 53 |
Aerospace, defense, oil, and gas | | (6) | | (2.2) | | | | — | | — | | | | (5) | | | (1) |
Energy | | (1) | | (0.5) | | | | 9 | | 4.8 | | | | (8) | | | (2) |
Medical | | (3) | | (1.9) | | | | (1) | | (1.2) | | | | (2) | | | — |
Total | | 123 | | 12.9 | | | | 101 | | 10.5 | | | | (28) | | | 50 |
Communications Solutions (3): | | | | | | | | | | | | | | | | | |
Data and devices | | 107 | | 38.5 | | | | 98 | | 35.0 | | | | (4) | | | 13 |
Appliances | | 12 | | 5.4 | | | | 16 | | 7.3 | | | | (4) | | | — |
Total | | 119 | | 23.8 | | | | 114 | | 22.8 | | | | (8) | | | 13 |
Total | $ | 269 | | 7.2 | % | | $ | 316 | | 8.4 | % | | $ | (110) | | $ | 63 |
| Change in Net Sales for the Six Months Ended March 25, 2022 | ||||||||||||||||
| versus Net Sales for the Six Months Ended March 26, 2021 | ||||||||||||||||
| Net Sales | | | Organic Net Sales | | | | | Acquisitions/ | ||||||||
| Growth (Decline) | | | Growth (Decline) (1) | | | Translation (2) | | (Divestitures) | ||||||||
| ($ in millions) | ||||||||||||||||
Transportation Solutions (3): | | |
| | | | | |
| | | | | | | | |
Automotive | $ | (86) | | (2.6) | % | | $ | (11) | | (0.4) | % | | $ | (75) | | $ | — |
Commercial transportation | | 46 | | 6.5 | | | | 57 | | 7.9 | | | | (11) | | | — |
Sensors | | 1 | | 0.2 | | | | 13 | | 2.5 | | | | (12) | | | — |
Total | | (39) | | (0.9) | | | | 59 | | 1.3 | | | | (98) | | | — |
Industrial Solutions (3): | | | | | | | | | | | | | | | | | |
Industrial equipment | | 300 | | 47.3 | | | | 212 | | 33.0 | | | | (25) | | | 113 |
Aerospace, defense, oil, and gas | | (14) | | (2.7) | | | | (6) | | (1.4) | | | | (8) | | | — |
Energy | | 15 | | 4.2 | | | | 38 | | 10.5 | | | | (12) | | | (11) |
Medical | | 8 | | 2.5 | | | | 11 | | 3.1 | | | | (3) | | | — |
Total | | 309 | | 16.9 | | | | 255 | | 13.9 | | | | (48) | | | 102 |
Communications Solutions (3): | | | | | | | | | | | | | | | | | |
Data and devices | | 222 | | 43.4 | | | | 209 | | 40.7 | | | | (5) | | | 18 |
Appliances | | 73 | | 17.7 | | | | 77 | | 18.4 | | | | (4) | | | — |
Total | | 295 | | 31.9 | | | | 286 | | 30.8 | | | | (9) | | | 18 |
Total | $ | 565 | | 7.8 | % | | $ | 600 | | 8.2 | % | | $ | (155) | | $ | 120 |
| | | | | | | | | | | | | | | | | |
(1) Organic net sales growth (decline) is a non-GAAP financial measure. See description of non-GAAP financial measures. | |||||||||||||||||
(2) Represents the change in net sales resulting from changes in foreign currency exchange rates. | |||||||||||||||||
(3) Industry end market information is presented consistently with our internal management reporting and may be periodically revised as management deems necessary. | |||||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended March 25, 2022
(UNAUDITED)
| | | | | Adjustments | | | | | |||||||
| | | | Acquisition- | | Restructuring | | | | | | |||||
| | | | Related | | and Other | | | | Adjusted | | |||||
| U.S. GAAP | | | Charges (1) | | Charges, Net (1) | | Tax Items (2) | | (Non-GAAP) (3) | | |||||
| ($ in millions, except per share data) | | ||||||||||||||
Operating income: | | | | | | | | | | | | | | | | |
Transportation Solutions | $ | 409 | | | $ | 4 | | $ | 9 | | $ | — | | $ | 422 | |
Industrial Solutions | | 148 | | | | 6 | | | 10 | | | — | | | 164 | |
Communications Solutions | | 148 | | | | — | | | 2 | | | — | | | 150 | |
Total | $ | 705 | | | $ | 10 | | $ | 21 | | $ | — | | $ | 736 | |
| | | | | | | | | | | | | | | | |
Operating margin | | 17.6 | % | | | | | | | | | | | | 18.4 | % |
| | | | | | | | | | | | | | | | |
Other income, net | $ | 5 | | | $ | — | | $ | — | | $ | — | | $ | 5 | |
| | | | | | | | | | | | | | | | |
Income tax expense | $ | (136) | | | $ | (2) | | $ | (5) | | $ | 8 | | $ | (135) | |
| | | | | | | | | | | | | | | | |
Effective tax rate | | 19.5 | % | | | | | | | | | | | | 18.6 | % |
| | | | | | | | | | | | | | | | |
Income from continuing operations | $ | 560 | | | $ | 8 | | $ | 16 | | $ | 8 | | $ | 592 | |
| | | | | | | | | | | | | | | | |
Diluted earnings per share from continuing operations | $ | 1.71 | | | $ | 0.02 | | $ | 0.05 | | $ | 0.02 | | $ | 1.81 | |
| | | | | | | | | | | | | | | | |
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | |||||||||||||||
(2) Includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower tax rate enacted in the canton of Schaffhausen on December 27, 2021. Also includes a $19 million income tax benefit related to the tax impacts of an intercompany transaction. Our estimated annual effective tax rate for fiscal 2022 includes a total income tax benefit of approximately $75 million related to this transaction, with portions recognized in the quarters ended December 24, 2021 and March 25, 2022 and the remainder to be recognized in the remaining quarters of fiscal 2022. | | |||||||||||||||
(3) See description of non-GAAP financial measures. | | |||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended March 26, 2021
(UNAUDITED)
| | | | | Adjustments | | | | | ||||
| | | | Acquisition- | | Restructuring | | | | ||||
| | | | Related | | and Other | | Adjusted | | ||||
| U.S. GAAP | | | Charges (1) | | Charges, Net (1) | | (Non-GAAP) (2) | | ||||
| ($ in millions, except per share data) | | |||||||||||
Operating income: | | | | | | | | | | | | | |
Transportation Solutions | $ | 398 | | | $ | 5 | | $ | 10 | | $ | 413 | |
Industrial Solutions | | 111 | | | | 3 | | | 5 | | | 119 | |
Communications Solutions | | 103 | | | | — | | | 2 | | | 105 | |
Total | $ | 612 | | | $ | 8 | | $ | 17 | | $ | 637 | |
| | | | | | | | | | | | | |
Operating margin | | 16.4 | % | | | | | | | | | 17.0 | % |
| | | | | | | | | | | | | |
Other income, net | $ | 4 | | | $ | — | | $ | — | | $ | 4 | |
| | | | | | | | | | | | | |
Income tax expense | $ | (106) | | | $ | (2) | | $ | (2) | | $ | (110) | |
| | | | | | | | | | | | | |
Effective tax rate | | 17.3 | % | | | | | | | | | 17.3 | % |
| | | | | | | | | | | | | |
Income from continuing operations | $ | 505 | | | $ | 6 | | $ | 15 | | $ | 526 | |
| | | | | | | | | | | | | |
Diluted earnings per share from continuing operations | $ | 1.51 | | | $ | 0.02 | | $ | 0.04 | | $ | 1.57 | |
| | | | | | | | | | | | | |
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | ||||||||||||
(2) See description of non-GAAP financial measures. | | ||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Six Months Ended March 25, 2022
(UNAUDITED)
| | | | | Adjustments | | | | | |||||||
| | | | Acquisition- | | Restructuring | | | | | | |||||
| | | | Related | | and Other | | | | Adjusted | | |||||
| U.S. GAAP | | | Charges (1) | | Charges, Net (1)(2) | | Tax Items (3) | | (Non-GAAP) (4) | | |||||
| ($ in millions, except per share data) | | ||||||||||||||
Operating income: | | | | | | | | | | | | | | | | |
Transportation Solutions | $ | 804 | | | $ | 7 | | $ | 3 | | $ | — | | $ | 814 | |
Industrial Solutions | | 271 | | | | 18 | | | 32 | | | — | | | 321 | |
Communications Solutions | | 302 | | | | 1 | | | 10 | | | — | | | 313 | |
Total | $ | 1,377 | | | $ | 26 | | $ | 45 | | $ | — | | $ | 1,448 | |
| | | | | | | | | | | | | | | | |
Operating margin | | 17.6 | % | | | | | | | | | | | | 18.5 | % |
| | | | | | | | | | | | | | | | |
Other income, net | $ | 20 | | | $ | — | | $ | — | | $ | (11) | | $ | 9 | |
| | | | | | | | | | | | | | | | |
Income tax expense | $ | (246) | | | $ | (5) | | $ | (12) | | $ | 3 | | $ | (260) | |
| | | | | | | | | | | | | | | | |
Effective tax rate | | 17.9 | % | | | | | | | | | | | | 18.1 | % |
| | | | | | | | | | | | | | | | |
Income from continuing operations | $ | 1,127 | | | $ | 21 | | $ | 33 | | $ | (8) | | $ | 1,173 | |
| | | | | | | | | | | | | | | | |
Diluted earnings per share from continuing operations | $ | 3.44 | | | $ | 0.06 | | $ | 0.10 | | $ | (0.02) | | $ | 3.58 | |
| | | | | | | | | | | | | | | | |
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | |||||||||||||||
(2) Includes $33 million recorded in net restructuring and other charges and $12 million recorded in cost of sales. | | |||||||||||||||
(3) Includes a $36 million income tax benefit related to the tax impacts of an intercompany transaction. Our estimated annual effective tax rate for fiscal 2022 includes a total income tax benefit of approximately $75 million related to this transaction, with portions recognized in the quarters ended December 24, 2021 and March 25, 2022 and the remainder to be recognized in the remaining quarters of fiscal 2022. Also includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower tax rate enacted in the canton of Schaffhausen, and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the indemnification terms of the purchase agreement. | | |||||||||||||||
(4) See description of non-GAAP financial measures. | | |||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Six Months Ended March 26, 2021
(UNAUDITED)
| | | | | Adjustments | | | | | |||||||
| | | | Acquisition- | | Restructuring | | | | | | |||||
| | | | Related | | and Other | | | | Adjusted | | |||||
| U.S. GAAP | | | Charges (1) | | Charges, Net (1) | | Tax Items (2) | | (Non-GAAP) (3) | | |||||
| ($ in millions, except per share data) | | ||||||||||||||
Operating income: | | | | | | | | | | | | | | | | |
Transportation Solutions | $ | 706 | | | $ | 10 | | $ | 128 | | $ | — | | $ | 844 | |
Industrial Solutions | | 187 | | | | 7 | | | 43 | | | — | | | 237 | |
Communications Solutions | | 167 | | | | — | | | 13 | | | — | | | 180 | |
Total | $ | 1,060 | | | $ | 17 | | $ | 184 | | $ | — | | $ | 1,261 | |
| | | | | | | | | | | | | | | | |
Operating margin | | 14.6 | % | | | | | | | | | | | | 17.4 | % |
| | | | | | | | | | | | | | | | |
Other income, net | $ | 3 | | | $ | — | | $ | — | | $ | — | | $ | 3 | |
| | | | | | | | | | | | | | | | |
Income tax expense | $ | (166) | | | $ | (4) | | $ | (34) | | $ | (29) | | $ | (233) | |
| | | | | | | | | | | | | | | | |
Effective tax rate | | 15.9 | % | | | | | | | | | | | | 18.7 | % |
| | | | | | | | | | | | | | | | |
Income from continuing operations | $ | 880 | | | $ | 13 | | $ | 150 | | $ | (29) | | $ | 1,014 | |
| | | | | | | | | | | | | | | | |
Diluted earnings per share from continuing operations | $ | 2.64 | | | $ | 0.04 | | $ | 0.45 | | $ | (0.09) | | $ | 3.05 | |
| | | | | | | | | | | | | | | | |
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | |||||||||||||||
(2) Income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets. | | |||||||||||||||
(3) See description of non-GAAP financial measures. | | |||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended June 25, 2021
(UNAUDITED)
| | | | | Adjustments | | | | | ||||
| | | | Acquisition- | | Restructuring | | | | ||||
| | | | Related | | and Other | | Adjusted | | ||||
| U.S. GAAP | | | Charges (1) | | Charges, Net (1) | | (Non-GAAP) (2) | | ||||
| ($ in millions, except per share data) | | |||||||||||
Operating income: | | | | | | | | | | | | | |
Transportation Solutions | $ | 433 | | | $ | 5 | | $ | 2 | | $ | 440 | |
Industrial Solutions | | 148 | | | | 4 | | | 6 | | | 158 | |
Communications Solutions | | 133 | | | | — | | | 3 | | | 136 | |
Total | $ | 714 | | | $ | 9 | | $ | 11 | | $ | 734 | |
| | | | | | | | | | | | | |
Operating margin | | 18.6 | % | | | | | | | | | 19.1 | % |
| | | | | | | | | | | | | |
Other income, net | $ | 2 | | | $ | — | | $ | — | | $ | 2 | |
| | | | | | | | | | | | | |
Income tax expense | $ | (124) | | | $ | (2) | | $ | (4) | | $ | (130) | |
| | | | | | | | | | | | | |
Effective tax rate | | 17.6 | % | | | | | | | | | 17.9 | % |
| | | | | | | | | | | | | |
Income from continuing operations | $ | 581 | | | $ | 7 | | $ | 7 | | $ | 595 | |
| | | | | | | | | | | | | |
Diluted earnings per share from continuing operations | $ | 1.74 | | | $ | 0.02 | | $ | 0.02 | | $ | 1.79 | |
| | | | | | | | | | | | | |
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | ||||||||||||
(2) See description of non-GAAP financial measures. | | ||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Year Ended September 24, 2021
(UNAUDITED)
| | | | | Adjustments | | | | | ||||||||||
| | | | Acquisition- | | Restructuring | | | | | | | | ||||||
| | | | Related | | and Other | | | | | | Adjusted | | ||||||
| U.S. GAAP | | | Charges (1) | | Charges, Net (1) | | Other Items (1)(2) | | Tax Items (3) | | (Non-GAAP) (4) | | ||||||
| ($ in millions, except per share data) | | |||||||||||||||||
Operating income: | | | | | | | | | | | | | | | | | | | |
Transportation Solutions | $ | 1,526 | | | $ | 18 | | $ | 135 | | $ | — | | $ | — | | $ | 1,679 | |
Industrial Solutions | | 469 | | | | 15 | | | 73 | | | — | | | — | | | 557 | |
Communications Solutions | | 439 | | | | 1 | | | 25 | | | — | | | — | | | 465 | |
Total | $ | 2,434 | | | $ | 34 | | $ | 233 | | $ | — | | $ | — | | $ | 2,701 | |
| | | | | | | | | | | | | | | | | | | |
Operating margin | | 16.3 | % | | | | | | | | | | | | | | | 18.1 | % |
| | | | | | | | | | | | | | | | | | | |
Other income (expense), net | $ | (17) | | | $ | — | | $ | — | | $ | 28 | | $ | — | | $ | 11 | |
| | | | | | | | | | | | | | | | | | | |
Income tax expense | $ | (123) | | | $ | (7) | | $ | (35) | | $ | (6) | | $ | (333) | | $ | (504) | |
| | | | | | | | | | | | | | | | | | | |
Effective tax rate | | 5.2 | % | | | | | | | | | | | | | | | 18.9 | % |
| | | | | | | | | | | | | | | | | | | |
Income from continuing operations | $ | 2,255 | | | $ | 27 | | $ | 198 | | $ | 22 | | $ | (333) | | $ | 2,169 | |
| | | | | | | | | | | | | | | | | | | |
Diluted earnings per share from continuing operations | $ | 6.77 | | | $ | 0.08 | | $ | 0.59 | | $ | 0.07 | | $ | (1.00) | | $ | 6.51 | |
| | | | | | | | | | | | | | | | | | | |
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | ||||||||||||||||||
(2) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract. | | ||||||||||||||||||
(3) Represents a $327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and expected future operating profit and taxable income, $29 million of income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets, and $23 million of income tax expense associated with the tax impacts of an intercompany transaction. | | ||||||||||||||||||
(4) See description of non-GAAP financial measures. | | ||||||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of April 27, 2022
(UNAUDITED)
| Outlook for | | |
| Quarter Ending | | |
| June 24, | | |
| 2022 | | |
Diluted earnings per share from continuing operations | $ | 1.71 | |
Restructuring and other charges, net | | 0.07 | |
Acquisition-related charges | | 0.03 | |
Tax items | | (0.06) | |
Adjusted diluted earnings per share from continuing operations (1) | $ | 1.75 | |
| | | |
| | | |
Net sales growth | | 1.4 | % |
Translation | | 4.0 | |
(Acquisitions) divestitures, net | | (2.1) | |
Organic net sales growth (1) | | 3.3 | % |
| | | |
(1) See description of non-GAAP financial measures. | |||
| EVERY CONNECTION COUNTS TE Connectivity Second Quarter 2022 Earnings April 27, 2022 |
| Forward - Looking Statements and Non - GAAP Financial Measures 2 Forward - Looking Statements This presentation contains certain "forward - looking statements" within the meaning of the U.S. Private Securities Litigation Ref orm 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 ant ici pated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature a re forward - looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identi fy forward - looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or ob ligation to do so) our forward - looking statements whether as a result of new information, future events or otherwise, except to the extent requ ired by law. The forward - looking statements in this presentation include statements addressing our future financial condition and operating r esults, and the impact on our operations resulting from the coronavirus disease 2019 (“COVID - 19”). Examples of factors that could cause actu al results to differ materially from those described in the forward - looking statements include, among others, the extent, severity and dura tion of COVID - 19 negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions aff ect ing demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign curre ncy exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we opera te, including continuing military conflict between Russia and Ukraine resulting from Russia’s invasion of Ukraine or escalating tensions in su rrounding countries; developments in the credit markets; future goodwill impairment; compliance with current and future environmental a nd other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the eff ect s of Swiss tax reform. In addition, the extent to which COVID - 19 will impact our business and our financial results will depend on future devel opments, which are highly uncertain and cannot be predicted. Such developments may include the geographic spread of the virus, the sev eri ty 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 glo bal economy and local economies in which we operate. More detailed information about these and other factors is set forth in TE Connectivity Lt d.'s Annual Report on Form 10 - K for the fiscal year ended Sept. 24, 2021 as well as in our Quarterly Reports on Form 10 - Q, Current Reports o n Form 8 - K and other reports filed by us with the U.S. Securities and Exchange Commission. Non - GAAP Financial Measures Where we have used non - GAAP financial measures, reconciliations to the most comparable GAAP measure are provided, along with a disclosure on the usefulness of the non - GAAP financial measure, in this presentation. |
| Earnings Highlights Record Sales & Adjusted EPS driven by strong operational performance • Demonstrating strategic positioning of our portfolio - Sales of $4.0B, up 7% reported and 8% organically Y/Y • Transportation up 5% organically Y/Y, primarily driven by Auto • Industrial up 11% organically Y/Y, driven by Industrial Equipment & Energy • Communications up 23% organically Y/Y, with strong growth in both businesses • Continued strong orders of $4.5B, reflecting strong demand; book to bill of 1.13 • Adjusted Operating Margins of 18.4%, up 140bps Y/Y with expansion in each segment • Adjusted EPS of $1.81, up 15% Y/Y • 1H Free Cash Flow of $615M; ~$670M returned to shareholders in Q2, with increased share buyback in the quarter • TE named among World’s Most Ethical Companies by Ethisphere for the 8 th consecutive year Q3 Guidance represents strong performance in an ongoing volatile environment • Expect Q3 sales of ~$3.9B and Adjusted EPS ~$1.75 • Sales up 1% on a reported basis and 3% organically Y/Y • Guidance includes ~300bps Y/Y Sales headwind from Covid related shutdowns in China ➢ Well positioned to benefit from long - term secular growth trends in electric vehicles, factory automation, renewable energy and data centers Organic Net Sales Growth (Decline), Adjusted EPS, Adjusted Operating Margin and Free Cash Flow are non - GAAP financial measures; see Appendix for descriptions and reconciliations 3 |
| Reported FY21 FY22 FY22 Q2 Growth Q2 Q1 Q2 Y/Y Q/Q Transportation 2,766 2,158 2,549 (8)% 18% Industrial 1,126 1,402 1,309 16% (7)% Communications 678 769 664 (2)% (14)% Total TE 4,570 4,329 4,522 (1)% 4% Book to Bill 1.22 1.13 1.13 Segment Orders Summary ($ in millions) 4 • Strong book to bill in each segment • TS 1.10 • IS 1.22 • CS 1.07 • Q2 Backlog up 40% Y/Y, up significantly in each segment • Orders in all segments reflect strong demand environment Demand Strength Continues with 1.13 Book to Bill & Backlog Growth Across All Segments |
| Transportation Solutions $2,287 $2,314 Q2 2021 Q2 2022 • Automotive growth despite production declines. Continue to benefit from content outperformance through our global leadership position in electric vehicles • Commercial Transportation growth driven by North America and Europe, with significant market outperformance in each region • Sensors roughly flat organically Y/Y; continue to see strong design win momentum in transportation applications Y/Y Growth Rates Reported Organic Automotive $1,653 1% 5% Commercial Transportation 394 3% 5% Sensors 267 (3)% 0% Transportation Solutions $2,314 1% 5% Q2 Sales Q2 Business Performance Q2 Adjusted Operating Margin $ in Millions Reported Up 1% Organic Up 5% Margin as expected, with strong operational performance despite broader macro challenges Adjusted EBITDA Margin 23.7% 23.6% 5 Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non - GAAP financial measures: see Ap pendix for descriptions and reconciliations 18.1% 18.2% Q2 2021 Q2 2022 |
| Industrial Solutions $952 $1,075 Q2 2021 Q2 2022 Y/Y Growth Rates Reported Organic Industrial Equipment $472 39% 27% Aerospace , Defense and Marine 261 (2)% 0% Energy 184 (1)% 5% Medical 158 (2)% (1)% Industrial Solutions $1,075 13% 11% Margin expansion driven by higher volume and strong operational performance 12.5% 15.3% Q2 2021 Q2 2022 Adjusted EBITDA Margin 17.4% 19.8% • Industrial Equipment double - digit growth in all regions, with continued benefits from increased capital spending in factory automation • AD&M roughly flat organically Y/Y; expect improvement in the Comm Air market going forward • Energy organic growth driven by renewable applications • Medical roughly flat organically Y/Y; expect recovery in interventional procedures going forward $ in Millions Q2 Sales Q2 Business Performance Q2 Adjusted Operating Margin Reported Up 13% Organic Up 11% 6 Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non - GAAP financial measures: see Ap pendix for descriptions and reconciliations |
| $499 $618 Q2 2021 Q2 2022 Reported Up 24% Organic Up 23% Y/Y Growth Rates Reported Organic Data & Devices $385 39% 35% Appliances 233 5% 7% Communications Solutions $618 24% 23% • D ata & Devices outperformance driven by content growth in high - speed cloud and share gains in artificial intelligence applications, enabling improved data center energy efficiency • Appliances growth in North America and Europe , with continued share gains enabled by our global manufacturing strategy 21.0% 24.3% Q2 2021 Q2 2022 Margin performance driven by continued strong operational execution and higher volumes Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non - GAAP financial measures: see Ap pendix for descriptions and reconciliations Communications Solutions Q2 Sales Q2 Adjusted Operating Margin Q2 Business Performance $ in Millions Adjusted EBITDA Margin 24.6% 27.5% 7 |
| Q2 Financial Summary ($ in Millions, except per share amounts) Q2 FY21 Q2 FY22 Net Sales $ 3,738 $ 4,007 Operating Income $ 612 $ 705 Operating Margin 16.4% 17.6% Acquisition - Related Charges 8 10 Restructuring & Other Charges, Net 17 21 Adjusted Operating Income $ 637 $ 736 Adjusted Operating Margin 17.0% 18.4% Earnings Per Share* $ 1.51 $ 1.71 Acquisition - Related Charges 0.02 0.02 Restructuring & Other Charges, Net 0.04 0.05 Tax Items - 0.02 Adjusted EPS $ 1.57 $ 1.81 * Represents Diluted Earnings Per Share from Continuing Operations. .. Adjusted Operating Income, Adjusted Operating Margin and Adjusted EPS are non - GAAP financial measures; see Appendix for descript ions and reconciliations. 8 |
| Q2 Financial Performance $3,738 $3,818 $4,007 Q2 2021 Q1 2022 Q2 2022 $1.57 $1.76 $1.81 Q2 2021 Q1 2022 Q2 2022 Adjusted EBITDA Margin 22.2% 23.8% 23.2% 17.0% 18.6% 18.4% Q2 2021 Q1 2022 Q2 2022 Adjusted Operating Margin, Adjusted EPS, Adjusted EBITDA Margin and Free Cash Flow are non - GAAP financial measures: see Appendix for descriptions and reconciliations. Sales Adjusted Operating Margin Free Cash Flow Adjusted EPS Results Reflect Strong Execution and Diversity of Our Portfolio 9 $1,006 $615 YTD 2021 YTD 2022 $ in Millions $ in Millions FCF reflecting planned inventory build Over $1B returned to shareholders YTD |
| EVERY CONNECTION COUNTS Additional Information |
| Y/Y Q2 2022 FX includes $6M unfavorable currency impact to sales from acquisitions Adjusted EPS is a non - GAAP financial measure; See Appendix for description and reconciliation. Sales (in millions) Adjusted EPS Q2 2021 Results $3,738 $1.57 Operational Performance 385 0.28 FX Impact (116) (0.01) Tax Rate Impact - (0.03) Q2 2022 Results $4,007 $1.81 11 |
| Y/Y Q3 2022 Adjusted EPS is a non - GAAP financial measure; See Appendix for description and reconciliation. Sales (in millions) Adjusted EPS Q3 2021 Results $3,845 $1.79 Operational Performance 209 0.02 FX Impact (154) (0.02) Tax Rate Impact - (0.04) Q3 2022 Guidance $3,900 $1.75 12 |
| ($ in Millions) Q2 2021 Q2 2022 Beginning Cash Balance $1,098 $982 Free Cash Flow 477 242 Dividends (159) (163) Share repurchases (140) (404) Net increase in debt 411 106 Other 61 (14) Ending Cash Balance $1,748 $749 Total Debt $4,521 $4,051 A/R $2,921 $3,068 Days Sales Outstanding* 70 69 Inventory $2,134 $2,999 Days on Hand* 74 99 Accounts Payable $1,793 $1,986 Days Outstanding* 64 67 Free Cash Flow and Working Capital Liquidity, Cash & Debt ($ in Millions) Q2 2021 Q2 2022 Cash from Operating Activities $580 $413 Capital expenditures, net Cash collected pursuant to collateral requirements related to cross - currency swap contracts (85) (18) (170) (1) Free Cash Flow $477 $242 Free Cash Flow is a non - GAAP financial measure, see Appendix for description and reconciliation * Adjusted to exclude the impact of acquisitions Q2 Balance Sheet & Cash Flow Summary 13 |
| EVERY CONNECTION COUNTS Appendix |
| 15 Non - GAAP Financial Measures We present non - GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financ ial measures in addition to results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non - GAAP financial measures provide supplem ental 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 be lie ve 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 th at 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 incr eas e 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) excludin g the impact of foreign currency exchange rates, and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic Net Sales Gro wth (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 fo rei gn 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 sig nif icant component in our incentive compensation plans. • Adjusted Operating Income and Adjusted Operating Margin – represent operating income and operating margin, respectively, (the mo st comparable GAAP financial measures) before special items including restructuring and other charges, acquisition - related charges, impairment of goodwill, a nd other income or charges, if any. We utilize these adjusted measures in combination with operating income and operating margin to assess segment level operating p erf ormance and to provide insight to management in evaluating segment operating plan execution and market conditions. Adjusted Operating Income is a significant c omp onent 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 cha rge s, acquisition - related charges, impairment of goodwill, other income or charges, and certain significant tax items, if any. • Adjusted Income from Continuing Operations – represents income from continuing operations (the most comparable GAAP financial me asure) before special items including restructuring and other charges, acquisition - related charges, impairment of goodwill, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects. • Adjusted Earnings Per Share – represents diluted earnings per share from continuing operations (the most comparable GAAP financi al measure) before special items including restructuring and other charges, acquisition - related charges, impairment of goodwill, tax sharing income related to ad justments 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. T his measure is a significant component in our incentive compensation plans. |
| 16 • Adjusted EBITDA and Adjusted EBITDA Margin - represent net income and net income as a percentage of net sales, respectively, (th e most comparable GAAP financial measures) before interest expense, interest income, income taxes, depreciation, and amortization, as adjusted for net other i nco me (expense), income (loss) from discontinued operations, and special items including restructuring and other charges, acquisition - related charges, impairment of goodwill, and other income or charges, if any. • Free Cash Flow (FCF) – is a useful measure of our ability to generate cash. The difference between net cash provided by operatin g 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 ide ntify. 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 ev alu ate cash flows generated from our operations. Free Cash Flow is defined as net cash provided by operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Voluntary pension contributions are excluded from the GAAP financial measure because this act ivi ty is driven by economic financing decisions rather than operating activity. Certain special items, including net payments related to pre - separation tax matters an d 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 lo ng - 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’ discret ion 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 tha t t he 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 acqu isi tions, that are not considered in the calculation of Free Cash Flow. • Free Cash Flow Conversion – represents the ratio of Free Cash Flow to Adjusted Income from Continuing Operations. We use Free Ca sh Flow Conversion as an indicator of our ability to convert earnings to cash. Non - GAAP Financial Measures (cont.) |
| Segment Summary 17 Transportation Solutions $ 2,314 $ 2,287 $ 4,472 $ 4,511 Industrial Solutions 1,075 952 2,134 1,825 Communications Solutions 618 499 1,219 924 Total $ 4,007 $ 3,738 $ 7,825 $ 7,260 Transportation Solutions $ 409 17.7 % $ 398 17.4 % $ 804 18.0 % $ 706 15.7 % Industrial Solutions 148 13.8 111 11.7 271 12.7 187 10.2 Communications Solutions 148 23.9 103 20.6 302 24.8 167 18.1 Total $ 705 17.6 % $ 612 16.4 % $ 1,377 17.6 % $ 1,060 14.6 % Transportation Solutions $ 422 18.2 % $ 413 18.1 % $ 814 18.2 % $ 844 18.7 % Industrial Solutions 164 15.3 119 12.5 321 15.0 237 13.0 Communications Solutions 150 24.3 105 21.0 313 25.7 180 19.5 Total $ 736 18.4 % $ 637 17.0 % $ 1,448 18.5 % $ 1,261 17.4 % 2022 For the Six Months Ended 2021 For the Quarters Ended March 25, March 26, March 25, March 26, Net Sales Operating Income Operating Margin Net Sales Net Sales Net Sales Income (1) Adjusted Operating Income (1) Income Operating Operating Income Operating Income Adjusted Operating Margin (1) (1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures. 2022 2021 ($ in millions) Operating Margin (1) Adjusted Operating Margin (1) Adjusted Operating Income (1) Adjusted Operating Adjusted Operating Adjusted Operating Margin (1) Adjusted Income (1) Operating Margin Operating Margin Operating Margin |
| Reconciliation of Net Sales Growth 18 Transportation Solutions (3) : Automotive $ 23 1.4 % $ 80 4.9 % $ (57) $ — Commercial transportation 12 3.1 21 5.4 (9) — Sensors (8) (2.9) — — (8) — Total 27 1.2 101 4.5 (74) — Industrial Solutions (3) : Industrial equipment 133 39.2 93 27.2 (13) 53 Aerospace, defense, oil, and gas (6) (2.2) — — (5) (1) Energy (1) (0.5) 9 4.8 (8) (2) Medical (3) (1.9) (1) (1.2) (2) — Total 123 12.9 101 10.5 (28) 50 Communications Solutions (3) : Data and devices 107 38.5 98 35.0 (4) 13 Appliances 12 5.4 16 7.3 (4) — Total 119 23.8 114 22.8 (8) 13 Total $ 269 7.2 % $ 316 8.4 % $ (110) $ 63 Transportation Solutions (3) : Automotive $ (86) (2.6) % $ (11) (0.4) % $ (75) $ — Commercial transportation 46 6.5 57 7.9 (11) — Sensors 1 0.2 13 2.5 (12) — Total (39) (0.9) 59 1.3 (98) — Industrial Solutions (3) : Industrial equipment 300 47.3 212 33.0 (25) 113 Aerospace, defense, oil, and gas (14) (2.7) (6) (1.4) (8) — Energy 15 4.2 38 10.5 (12) (11) Medical 8 2.5 11 3.1 (3) — Total 309 16.9 255 13.9 (48) 102 Communications Solutions (3) : Data and devices 222 43.4 209 40.7 (5) 18 Appliances 73 17.7 77 18.4 (4) — Total 295 31.9 286 30.8 (9) 18 Total $ 565 7.8 % $ 600 8.2 % $ (155) $ 120 (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. ($ in millions) Net Sales Growth (Decline) Organic Net Sales Growth (Decline) (1) Change in Net Sales for the Quarter Ended March 25, 2022 versus Net Sales for the Quarter Ended March 26, 2021 Net Sales Organic Net Sales Acquisitions/ Growth (Decline) Growth (Decline) (1) Translation (2) (Divestitures) Change in Net Sales for the Six Months Ended March 25, 2022 versus Net Sales for the Six Months Ended March 26, 2021 ($ in millions) Translation (2) Acquisitions/ (Divestitures) |
| Reconciliation of Non - GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 25, 2022 19 Operating income: Transportation Solutions $ 409 4 9 — $ 422 Industrial Solutions 148 6 10 — 164 Communications Solutions 148 — 2 — 150 Total $ 705 $ 10 $ 21 $ — $ 736 Operating margin 17.6 % 18.4 % Other income, net $ 5 — — — $ 5 Income tax expense $ (136) (2) (5) 8 $ (135) Effective tax rate 19.5 % 18.6 % Income from continuing operations $ 560 8 16 8 $ 592 Diluted earnings per share from continuing operations $ 1.71 $ 0.02 $ 0.05 $ 0.02 $ 1.81 and Other Adjusted Related Acquisition- Restructuring Adjustments (3) See description of non-GAAP financial measures. (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. U.S. GAAP Charges (1) (Non-GAAP) (3) Charges, Net (1) Tax Items (2) ($ in millions, except per share data) (2) Includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower tax rate enacted in the canton of Schaffhausen on December 27, 2021. Also includes a $19 million income tax benefit related to the tax impacts of an intercompany transaction. Our estimated annual effective tax rate for fiscal 2022 includes a total income tax benefit of approximately $75 million related to this transaction, with portions recognized in the quarters ended December 24, 2021 and March 25, 2022 and the remainder to be recognized in the remaining quarters of fiscal 2022. |
| Reconciliation of Non - GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 26, 2021 20 Operating income: Transportation Solutions $ 398 $ 5 $ 10 $ 413 Industrial Solutions 111 3 5 119 Communications Solutions 103 — 2 105 Total $ 612 $ 8 $ 17 $ 637 Operating margin 16.4 % 17.0 % Other income, net $ 4 $ — $ — $ 4 Income tax expense $ (106) $ (2) $ (2) $ (110) Effective tax rate 17.3 % 17.3 % Income from continuing operations $ 505 $ 6 $ 15 $ 526 Diluted earnings per share from continuing operations $ 1.51 $ 0.02 $ 0.04 $ 1.57 (Non-GAAP) (2) ($ in millions, except per share data) and Other Charges, Net (1) (2) See description of non-GAAP financial measures. U.S. GAAP Acquisition- Related Charges (1) Adjustments (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. Restructuring Adjusted |
| Reconciliation of Non - GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 24, 2021 21 Operating income: Transportation Solutions $ 395 3 (6) — $ 392 Industrial Solutions 123 12 22 — 157 Communications Solutions 154 1 8 — 163 Total $ 672 $ 16 $ 24 $ — $ 712 Operating margin 17.6 % 18.6 % Other income, net $ 15 — — (11) $ 4 Income tax expense $ (110) (3) (7) (5) $ (125) Effective tax rate 16.2 % 17.7 % Income from continuing operations $ 567 13 17 (16) $ 581 Diluted earnings per share from continuing operations $ 1.72 $ 0.04 $ 0.05 $ (0.05) $ 1.76 Acquisition- Restructuring Adjustments U.S. GAAP Charges (1) Charges, Net (1)(2) Tax Items (3) (Non-GAAP) (4) Related and Other Adjusted ($ in millions, except per share data) (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. (3) Includes a $17 million income tax benefit related to the tax impacts of an intercompany transaction. Our estimated annual effective tax rate for fiscal 2022 includes a total income tax benefit of approximately $75 million related to this transaction. Also includes $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the indemnification terms of the purchase agreement. (4) See description of non-GAAP financial measures. (2) Includes $12 million recorded in net restructuring and other charges and $12 million recorded in cost of sales. |
| Reconciliation of Non - GAAP Financial Measures to GAAP Financial Measures for the Six Months Ended March 25, 2022 22 Operating income: Transportation Solutions $ 804 7 3 — $ 814 Industrial Solutions 271 18 32 — 321 Communications Solutions 302 1 10 — 313 Total $ 1,377 $ 26 $ 45 $ — $ 1,448 Operating margin 17.6 % 18.5 % Other income, net $ 20 — — (11) $ 9 Income tax expense $ (246) (5) (12) 3 $ (260) Effective tax rate 17.9 % 18.1 % Income from continuing operations $ 1,127 21 33 (8) $ 1,173 Diluted earnings per share from continuing operations $ 3.44 $ 0.06 $ 0.10 $ (0.02) $ 3.58 ($ in millions, except per share data) (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. (3) Includes a $36 million income tax benefit related to the tax impacts of an intercompany transaction. Our estimated annual effective tax rate for fiscal 2022 includes a total income tax benefit of approximately $75 million related to this transaction, with portions recognized in the quarters ended December 24, 2021 and March 25, 2022 and the remainder to be recognized in the remaining quarters of fiscal 2022. Also includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower tax rate enacted in the canton of Schaffhausen, and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the indemnification terms of the purchase agreement. (4) See description of non-GAAP financial measures. Related and Other Adjusted U.S. GAAP Charges (1) Charges, Net (1)(2) Tax Items (3) (Non-GAAP) (4) (2) Includes $33 million recorded in net restructuring and other charges and $12 million recorded in cost of sales. Adjustments Acquisition- Restructuring |
| Reconciliation of Non - GAAP Financial Measures to GAAP Financial Measures for the Six Months Ended March 26, 2021 23 Operating income: Transportation Solutions $ 706 $ 10 $ 128 $ — $ 844 Industrial Solutions 187 7 43 — 237 Communications Solutions 167 — 13 — 180 Total $ 1,060 $ 17 $ 184 $ — $ 1,261 Operating margin 14.6 % 17.4 % Other income, net $ 3 $ — $ — $ — $ 3 Income tax expense $ (166) $ (4) $ (34) $ (29) $ (233) Effective tax rate 15.9 % 18.7 % Income from continuing operations $ 880 $ 13 $ 150 $ (29) $ 1,014 Diluted earnings per share from continuing operations $ 2.64 $ 0.04 $ 0.45 $ (0.09) $ 3.05 Adjustments Acquisition- Restructuring Related and Other Adjusted U.S. GAAP Charges (1) Charges, Net (1) Tax Items (2) (Non-GAAP) (3) (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. ($ in millions, except per share data) |
| Reconciliation of Non - GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 25, 2021 24 Operating income: Transportation Solutions $ 433 $ 5 $ 2 $ 440 Industrial Solutions 148 4 6 158 Communications Solutions 133 — 3 136 Total $ 714 $ 9 $ 11 $ 734 Operating margin 18.6 % 19.1 % Income tax expense $ (124) $ (2) $ (4) $ (130) Effective tax rate 17.6 % 17.9 % Income from continuing operations $ 581 $ 7 $ 7 $ 595 Diluted earnings per share from continuing operations $ 1.74 $ 0.02 $ 0.02 $ 1.79 Acquisition- Restructuring Adjustments ($ in millions, except per share data) (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (2) See description of non-GAAP financial measures. Related and Other Adjusted U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (2) |
| Reconciliation of Non - GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 24, 2021 25 Operating income: Transportation Solutions $ 1,526 $ 18 $ 135 $ — $ — $ 1,679 Industrial Solutions 469 15 73 — — 557 Communications Solutions 439 1 25 — — 465 Total $ 2,434 $ 34 $ 233 $ — $ — $ 2,701 Operating margin 16.3 % 18.1 % Other income (expense), net $ (17) $ — $ — $ 28 $ — $ 11 Income tax expense $ (123) $ (7) $ (35) $ (6) $ (333) $ (504) Effective tax rate 5.2 % 18.9 % Income from continuing operations $ 2,255 $ 27 $ 198 $ 22 $ (333) $ 2,169 Diluted earnings per share from continuing operations $ 6.77 $ 0.08 $ 0.59 $ 0.07 $ (1.00) $ 6.51 Adjustments Acquisition- Restructuring Related and Other Adjusted U.S. GAAP Charges (1) Charges, Net (1) Tax Items (3) (Non-GAAP) (4) Other Items (1)(2) (4) See description of non-GAAP financial measures. ($ in millions, except per share data) (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. (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. (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. |
| Reconciliation of Free Cash Flow 26 Net cash provided by operating activities $ 413 580 $ 945 $ 1,220 Net cash used in investing activities (184) (77) (383) (323) Net cash provided by (used in) financing activities (460) 151 (1,012) (101) Effect of currency translation on cash (2) (4) (4) 7 Net increase (decrease) in cash, cash equivalents, and restricted cash $ (233) $ 650 $ (454) $ 803 Net cash provided by operating activities $ 413 $ 580 $ 945 $ 1,220 Excluding: Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts (1) (18) (42) 12 Capital expenditures, net (170) (85) (288) (226) Free cash flow (1) $ 242 $ 477 $ 615 $ 1,006 (in millions) For the Quarters Ended March 25, March 26, March 25, March 26, For the Six Months Ended (1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures. 2022 2021 2022 2021 |
| Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin 27 Net income $ 560 $ 566 $ 506 (Income) loss from discontinued operations — 1 (1) Income tax expense 136 110 106 Other income, net (5) (15) (4) Interest expense 18 12 13 Interest income (4) (2) (8) Operating income 705 672 612 Acquisition-related charges 10 16 8 Restructuring and other charges, net 21 24 17 Adjusted operating income (1) 736 712 637 Depreciation and amortization 194 198 193 Adjusted EBITDA (1) $ 930 $ 910 $ 830 Net sales $ 4,007 $ 3,818 $ 3,738 Net income as a percentage of net sales 14.0 % 14.8 % 13.5 % Adjusted EBITDA margin (1) 23.2 % 23.8 % 22.2 % Operating income $ 409 $ 148 $ 148 $ 705 $ 398 $ 111 $ 103 $ 612 Acquisition-related charges 4 6 — 10 5 3 — 8 Restructuring and other charges, net 9 10 2 21 10 5 2 17 Adjusted operating income (1) 422 164 150 736 413 119 105 637 Depreciation and amortization 125 49 20 194 128 47 18 193 Adjusted EBITDA (1) $ 547 $ 213 $ 170 $ 930 $ 541 $ 166 $ 123 $ 830 Net sales $ 2,314 $ 1,075 $ 618 $ 4,007 $ 2,287 $ 952 $ 499 $ 3,738 Operating margin 17.7 % 13.8 % 23.9 % 17.6 % 17.4 % 11.7 % 20.6 % 16.4 % Adjusted operating margin (1) 18.2 % 15.3 % 24.3 % 18.4 % 18.1 % 12.5 % 21.0 % 17.0 % Adjusted EBITDA margin (1) 23.6 % 19.8 % 27.5 % 23.2 % 23.7 % 17.4 % 24.6 % 22.2 % (1) See description of non-GAAP financial measures. Communications Solutions Communications For the Quarters Ended March 25, 2022 March 26, 2021 March 25, 2022 December 24, 2021 Total ($ in millions) Total Transportation Solutions Industrial Solutions Solutions Solutions Transportation Industrial Solutions March 26, 2021 For the Quarters Ended ($ in millions) |
| Reconciliation of Forward - Looking Non - GAAP Financial Measures to Forward - Looking GAAP Financial Measures 28 Diluted earnings per share from continuing operations $ 1.71 Restructuring and other charges, net 0.07 Acquisition-related charges 0.03 Tax items (0.06) Adjusted diluted earnings per share from continuing operations (2) $ 1.75 Net sales growth 1.4 % Translation 4.0 (Acquisitions) divestitures, net (2.1) Organic net sales growth (2) 3.3 % Effective tax rate 17.2 % 14.5 % Effective tax rate adjustments (3) 2.8 4.5 Adjusted effective tax rate (2) 20.0 % 19.0 % (3) Includes adjustments for special tax items and the tax effect of acquisition-related charges and net restructuring and other charges, calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (1) Outlook is as of April 27, 2022. (2) See description of non-GAAP financial measures. 2022 (1) June 24, Outlook for Fiscal 2022 (1) Quarter Ending Outlook for |
