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): April 21, 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 April 21, 2021, TE Connectivity Ltd. (the “Company”) issued a press release reporting the Company’s second quarter 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 April 21, 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 April 21, 2021 | |
| 99.2 | Presentation - TE Connectivity Q2 2021 Earnings Call (April 21, 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: April 21, 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
| | |
|---|---|
| | te.com |
TE Connectivity announces second quarter results for fiscal year 2021
Significant growth in sales and EPS year over year, exceeding company expectations
SCHAFFHAUSEN, Switzerland – April 21, 2021 – TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal second quarter ended March 26, 2021.
Second Quarter Highlights
| ● | Net sales were $3.7 billion, up 17% on a reported basis, and 11% on an organic basis year over year. |
|---|---|
| ● | Orders of $4.6 billion, up 36% year over year. |
| --- | --- |
| ● | GAAP diluted earnings per share (EPS) from continuing operations were $1.51, and adjusted EPS were $1.57, up 22% year over year. |
| --- | --- |
| ● | Cash flow from operating activities was $580 million and free cash flow was $477 million, with approximately $340 million returned to shareholders. |
| --- | --- |
“I am very pleased with our performance as well as our team’s ability to deliver double digit sales growth and record quarterly adjusted EPS that exceeded our expectations,” said TE Connectivity CEO Terrence Curtin. “We delivered strong earnings this quarter, and year-to-date generated free cash flow of $1 billion, also a record for the first half of a fiscal year. It is also encouraging that we are benefiting from both a recovering economic backdrop as well as our leadership positions in long-term technology trends that drive content growth. I am proud of our team’s perseverance to serve our customers through a global economic recovery and resulting challenges in the broader supply chain.”
Third Quarter FY21 Outlook
For the third quarter of fiscal 2021, the company expects net sales of approximately $3.7 billion, compared to $2.5 billion in the prior year. GAAP diluted EPS from continuing operations are expected to be approximately $1.51, compared to a loss of $0.18 in the prior year. Adjusted EPS are expected to be approximately $1.57, compared to adjusted EPS of $0.59 in the prior 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 (866) 211-4092, and for international callers, the dial-in number is (647) 689-6620. |
| --- | --- |
| ● | 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 21, 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 approximately 80,000 employees, including more than 7,500 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.
#
| Contacts: | Media Relations : | Investor Relations : |
|---|---|---|
| | Fernando Vivanco | Sujal Shah |
| | TE Connectivity | TE Connectivity |
| | 610-893-9756 | 610-893-9790 |
| | Fernando.Vivanco@te.com | Sujal.Shah@te.com |
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Six Months Ended | ||||||||
| | March 26, | | March 27, | | March 26, | | March 27, | ||||
| | 2021 | 2020 | 2021 | **** | 2020 | ||||||
| | (in millions, except per share data) | ||||||||||
| Net sales | $ | 3,738 | | $ | 3,195 | | $ | 7,260 | | $ | 6,363 |
| Cost of sales | | 2,528 | | | 2,166 | | | 4,904 | | | 4,304 |
| Gross margin | | 1,210 | | | 1,029 | | | 2,356 | | | 2,059 |
| Selling, general, and administrative expenses | | 401 | | | 352 | | | 762 | | | 719 |
| Research, development, and engineering expenses | | 174 | | | 158 | | | 336 | | | 319 |
| Acquisition and integration costs | | 6 | | | 12 | | | 14 | | | 19 |
| Restructuring and other charges, net | | 17 | | | 22 | | | 184 | | | 46 |
| Impairment of goodwill | | — | | | 900 | | | — | | | 900 |
| Operating income (loss) | | 612 | | | (415) | | | 1,060 | | | 56 |
| Interest income | | 8 | | | 5 | | | 11 | | | 11 |
| Interest expense | | (13) | | | (11) | | | (28) | | | (23) |
| Other income, net | | 4 | | | 11 | | | 3 | | | 16 |
| Income (loss) from continuing operations before income taxes | | 611 | | | (410) | | | 1,046 | | | 60 |
| Income tax expense | | (106) | | | (42) | | | (166) | | | (489) |
| Income (loss) from continuing operations | | 505 | | | (452) | | | 880 | | | (429) |
| Income (loss) from discontinued operations, net of income taxes | | 1 | | | (4) | | | 7 | | | (1) |
| Net income (loss) | $ | 506 | | $ | (456) | | $ | 887 | | $ | (430) |
| | | | | | | | | | | | |
| Basic earnings (loss) per share: | | | | | | | | | | | |
| Income (loss) from continuing operations | $ | 1.53 | | $ | (1.35) | | $ | 2.66 | | $ | (1.28) |
| Income (loss) from discontinued operations | | — | | | (0.01) | | | 0.02 | | | — |
| Net income (loss) | | 1.53 | | | (1.37) | | | 2.68 | | | (1.29) |
| | | | | | | | | | | | |
| Diluted earnings (loss) per share: | | | | | | | | | | | |
| Income (loss) from continuing operations | $ | 1.51 | | $ | (1.35) | | $ | 2.64 | | $ | (1.28) |
| Income (loss) from discontinued operations | | — | | | (0.01) | | | 0.02 | | | — |
| Net income (loss) | | 1.51 | | | (1.37) | | | 2.66 | | | (1.29) |
| | | | | | | | | | | | |
| Weighted-average number of shares outstanding: | | | | | | | | | | | |
| Basic | | 331 | | | 334 | | | 331 | | | 334 |
| Diluted | | 334 | | | 334 | | | 333 | | | 334 |
TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | | | | |
|---|---|---|---|---|---|
| | March 26, | | September 25, | ||
| | 2021 | | 2020 | ||
| | (in millions, except share data) | ||||
| Assets | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | $ | 1,748 | | $ | 945 |
| Accounts receivable, net of allowance for doubtful accounts of $35 and $29, respectively | | 2,921 | | | 2,377 |
| Inventories | | 2,134 | | | 1,950 |
| Prepaid expenses and other current assets | | 619 | | | 512 |
| Total current assets | | 7,422 | | | 5,784 |
| Property, plant, and equipment, net | | 3,662 | | | 3,650 |
| Goodwill | | 5,342 | | | 5,224 |
| Intangible assets, net | | 1,548 | | | 1,593 |
| Deferred income taxes | | 2,204 | | | 2,178 |
| Other assets | | 789 | | | 813 |
| Total assets | $ | 20,967 | | $ | 19,242 |
| Liabilities, redeemable noncontrolling interests, and shareholders' equity | | | | | |
| Current liabilities: | | | | | |
| Short-term debt | $ | 919 | | $ | 694 |
| Accounts payable | | 1,793 | | | 1,276 |
| Accrued and other current liabilities | | 2,327 | | | 1,720 |
| Total current liabilities | | 5,039 | | | 3,690 |
| Long-term debt | | 3,602 | | | 3,452 |
| Long-term pension and postretirement liabilities | | 1,299 | | | 1,336 |
| Deferred income taxes | | 140 | | | 143 |
| Income taxes | | 277 | | | 252 |
| Other liabilities | | 827 | | | 874 |
| Total liabilities | | 11,184 | | | 9,747 |
| Commitments and contingencies | | | | | |
| Redeemable noncontrolling interests | | 114 | | | 112 |
| Shareholders' equity: | | | | | |
| Common shares, CHF 0.57 par value, 338,953,381 shares authorized and issued | | 149 | | | 149 |
| Accumulated earnings | | 10,541 | | | 10,348 |
| Treasury shares, at cost, 8,520,155 and 8,295,878 shares, respectively | | (775) | | | (669) |
| Accumulated other comprehensive loss | | (246) | | | (445) |
| Total shareholders' equity | | 9,669 | | | 9,383 |
| Total liabilities, redeemable noncontrolling interests, and shareholders' equity | $ | 20,967 | | $ | 19,242 |
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Six Months Ended | ||||||||
| | March 26, | | March 27, | | March 26, | | March 27, | ||||
| | 2021 | | 2020 | | 2021 | | 2020 | ||||
| | (in millions) | ||||||||||
| Cash flows from operating activities: | | | | | | | | | | | |
| Net income (loss) | $ | 506 | | $ | (456) | | $ | 887 | | $ | (430) |
| (Income) loss from discontinued operations, net of income taxes | | (1) | | | 4 | | | (7) | | | 1 |
| Income (loss) from continuing operations | | 505 | | | (452) | | | 880 | | | (429) |
| Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: | | | | | | | | | | | |
| Impairment of goodwill | | — | | | 900 | | | — | | | 900 |
| Depreciation and amortization | | 193 | | | 180 | | | 380 | | | 354 |
| Deferred income taxes | | (6) | | | (49) | | | (48) | | | 345 |
| Non-cash lease cost | | 29 | | | 25 | | | 59 | | | 52 |
| Provision for losses on accounts receivable and inventories | | 16 | | | (2) | | | 22 | | | 18 |
| Share-based compensation expense | | 30 | | | 15 | | | 49 | | | 37 |
| Other | | (41) | | | 1 | | | (20) | | | 11 |
| Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | | | | | | | | | | | |
| Accounts receivable, net | | (268) | | | (116) | | | (567) | | | (140) |
| Inventories | | (67) | | | 25 | | | (212) | | | (151) |
| Prepaid expenses and other current assets | | 57 | | | 48 | | | (30) | | | 25 |
| Accounts payable | | 161 | | | (45) | | | 510 | | | 49 |
| Accrued and other current liabilities | | 37 | | | 5 | | | 125 | | | (180) |
| Income taxes | | 17 | | | (9) | | | 34 | | | 1 |
| Other | | (83) | | | (45) | | | 38 | | | — |
| Net cash provided by operating activities | | 580 | | | 481 | | | 1,220 | | | 892 |
| Cash flows from investing activities: | | | | | | | | | | | |
| Capital expenditures | | (142) | | | (133) | | | (284) | | | (309) |
| Proceeds from sale of property, plant, and equipment | | 57 | | | 1 | | | 58 | | | 3 |
| Acquisition of businesses, net of cash acquired | | — | | | (244) | | | (107) | | | (359) |
| Other | | 8 | | | (2) | | | 10 | | | (2) |
| Net cash used in investing activities | | (77) | | | (378) | | | (323) | | | (667) |
| Cash flows from financing activities: | | | | | | | | | | | |
| Net decrease in commercial paper | | — | | | (210) | | | — | | | (219) |
| Proceeds from issuance of debt | | 661 | | | 593 | | | 661 | | | 593 |
| Repayment of debt | | (250) | | | — | | | (280) | | | — |
| Proceeds from exercise of share options | | 44 | | | 13 | | | 119 | | | 27 |
| Repurchase of common shares | | (140) | | | (269) | | | (259) | | | (408) |
| Payment of common share dividends to shareholders | | (159) | | | (153) | | | (318) | | | (307) |
| Other | | (5) | | | (5) | | | (24) | | | (31) |
| Net cash provided by (used in) financing activities | | 151 | | | (31) | | | (101) | | | (345) |
| Effect of currency translation on cash | | (4) | | | (18) | | | 7 | | | (11) |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | | 650 | | | 54 | | | 803 | | | (131) |
| Cash, cash equivalents, and restricted cash at beginning of period | | 1,098 | | | 742 | | | 945 | | | 927 |
| Cash, cash equivalents, and restricted cash at end of period | $ | 1,748 | | $ | 796 | | $ | 1,748 | | $ | 796 |
| | | | | | | | | | | | |
| Supplemental cash flow information: | | | | | | | | | | | |
| Interest paid on debt, net | $ | 29 | | $ | 20 | | $ | 33 | | $ | 24 |
| Income taxes paid, net of refunds | | 96 | | | 101 | | | 181 | | | 144 |
TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | For the Six Months Ended | ||||||||
| | March 26, | | March 27, | | March 26, | | March 27, | ||||
| | 2021 | | 2020 | | 2021 | | 2020 | ||||
| | (in millions) | ||||||||||
| Net cash provided by continuing operating activities | $ | 580 | | $ | 481 | | $ | 1,220 | | $ | 892 |
| Excluding: | | | | | | | | | | | |
| Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts | | (18) | | | (38) | | | 12 | | | (32) |
| Capital expenditures, net | | (85) | | | (132) | | | (226) | | | (306) |
| Free cash flow ^(1)^ | $ | 477 | | $ | 311 | | $ | 1,006 | | $ | 554 |
| | | | | | | | | | | | |
| ^(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 26, | | | March 27, | | | March 26, | | | March 27, | | |||||||||||
| | 2021 | | | 2020 | | | 2021 | | | 2020 | | |||||||||||
| | ( in millions) | | ||||||||||||||||||||
| | Net Sales | **** | | | | Net Sales | **** | | | | Net Sales | **** | | | | Net Sales | **** | | | |||
| Transportation Solutions | | | | | $ | 1,857 | | | | | $ | 4,511 | | | | | $ | 3,725 | | | | |
| Industrial Solutions | | | | | | | 962 | | | | | | 1,825 | | | | | | 1,889 | | | |
| Communications Solutions | | | | | | | 376 | | | | | | 924 | | | | | | 749 | | | |
| Total | | | | | $ | 3,195 | | | | | $ | 7,260 | | | | | $ | 6,363 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | | Operating | |||||||
| | Income | | Margin | | Income (Loss) | | Margin | | Income | | Margin | | Income (Loss) | | Margin | |||||||
| Transportation Solutions | | 17.4 | % | | $ | (606) | | (32.6) | % | | $ | 706 | | 15.7 | % | | $ | (290) | | (7.8) | % | |
| Industrial Solutions | | | 11.7 | | | | 142 | | 14.8 | | | | 187 | | 10.2 | | | | 257 | | 13.6 | |
| Communications Solutions | | | 20.6 | | | | 49 | | 13.0 | | | | 167 | | 18.1 | | | | 89 | | 11.9 | |
| Total | | 16.4 | % | | $ | (415) | | (13.0) | % | | $ | 1,060 | | 14.6 | % | | $ | 56 | | 0.9 | % | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 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 | | 18.1 | % | | $ | 322 | | 17.3 | % | | $ | 844 | | 18.7 | % | | $ | 647 | | 17.4 | % | |
| Industrial Solutions | | | 12.5 | | | | 145 | | 15.1 | | | | 237 | | 13.0 | | | | 277 | | 14.7 | |
| Communications Solutions | | | 21.0 | | | | 52 | | 13.8 | | | | 180 | | 19.5 | | | | 97 | | 13.0 | |
| Total | | 17.0 | % | | $ | 519 | | 16.2 | % | | $ | 1,261 | | 17.4 | % | | $ | 1,021 | | 16.0 | % | |
| | | | | | | | | | | | | | | | | | | | | | | |
| ^(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 March 26, 2021 | |||||||||||||||
| | versus Net Sales for the Quarter Ended March 27, 2020 | |||||||||||||||
| | Net Sales | | | Organic Net Sales | | | | | Acquisitions/ | |||||||
| | Growth (Decline) | | **** | Growth (Decline) ^(1)^ | | **** | Translation ^(2)^ | **** | (Divestiture) | |||||||
| | ( in millions) | |||||||||||||||
| Transportation Solutions ^(3)^: | | **** | | | | | | **** | | | | | | | | |
| Automotive | | 19.4 | % | | $ | 184 | | 13.5 | % | | $ | 81 | | $ | — | |
| Commercial transportation | | | 29.9 | | | | 73 | | 24.8 | | | | 15 | | | — |
| Sensors | | | 38.9 | | | | 27 | | 13.4 | | | | 8 | | | 42 |
| Total | | | 23.2 | | | | 284 | | 15.3 | | | | 104 | | | 42 |
| Industrial Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Aerospace, defense, oil, and gas | | | (16.0) | | | | (66) | | (20.8) | | | | 7 | | | 8 |
| Industrial equipment | | | 21.1 | | | | 44 | | 15.7 | | | | 15 | | | — |
| Medical | | | (13.4) | | | | (25) | | (13.4) | | | | — | | | — |
| Energy | | | 3.9 | | | | 7 | | 4.0 | | | | 9 | | | (9) |
| Total | | | (1.0) | | | | (40) | | (4.2) | | | | 31 | | | (1) |
| Communications Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Data and devices | | | 27.5 | | | | 52 | | 24.0 | | | | 8 | | | — |
| Appliances | | | 39.9 | | | | 56 | | 35.3 | | | | 7 | | | — |
| Total | | | 32.7 | | | | 108 | | 28.7 | | | | 15 | | | — |
| Total | | 17.0 | % | | $ | 352 | | 11.0 | % | | $ | 150 | | $ | 41 |
All values are in US Dollars.
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Change in Net Sales for the Six Months Ended March 26, 2021 | |||||||||||||||
| | versus Net Sales for the Six Months Ended March 27, 2020 | |||||||||||||||
| | Net Sales | | | Organic Net Sales | | | | | Acquisitions/ | |||||||
| | Growth (Decline) | | | Growth (Decline) ^(1)^ | | | Translation ^(2)^ | | (Divestiture) | |||||||
| | ( in millions) | |||||||||||||||
| Transportation Solutions ^(3)^: | | **** | | | | | | **** | | | | | | | | |
| Automotive | | 17.7 | % | | $ | 345 | | 12.4 | % | | $ | 144 | | $ | - | |
| Commercial transportation | | | 29.2 | | | | 138 | | 24.9 | | | | 23 | | | - |
| Sensors | | | 33.7 | | | | 34 | | 8.2 | | | | 13 | | | 89 |
| Total | | | 21.1 | | | | 517 | | 13.8 | | | | 180 | | | 89 |
| Industrial Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Aerospace, defense, oil, and gas | | | (17.5) | | | | (134) | | (21.4) | | | | 13 | | | 11 |
| Industrial equipment | | | 16.8 | | | | 65 | | 11.8 | | | | 26 | | | - |
| Medical | | | (13.2) | | | | (49) | | (13.5) | | | | 1 | | | - |
| Energy | | | 0.8 | | | | - | | 0.1 | | | | 12 | | | (9) |
| Total | | | (3.4) | | | | (118) | | (6.3) | | | | 52 | | | 2 |
| Communications Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Data and devices | | | 17.2 | | | | 62 | | 14.4 | | | | 13 | | | - |
| Appliances | | | 32.1 | | | | 89 | | 28.3 | | | | 11 | | | - |
| Total | | | 23.4 | | | | 151 | | 20.2 | | | | 24 | | | - |
| Total | | 14.1 | % | | $ | 550 | | 8.6 | % | | $ | 256 | | $ | 91 | |
| | | | | | | | | | | | | | | | | |
| ^(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 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 | | | $ | 5 | | $ | 10 | | $ | 413 | | |
| Industrial Solutions | | | | | 3 | | | 5 | | | 119 | |
| Communications Solutions | | | | | — | | | 2 | | | 105 | |
| Total | | | $ | 8 | | $ | 17 | | $ | 637 | | |
| | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | 17.0 | % |
| | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | 4 | | |
| | | | | | | | | | | | | |
| Income tax expense | | | $ | (2) | | $ | (2) | | $ | (110) | | |
| | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | 17.3 | % |
| | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 6 | | $ | 15 | | $ | 526 | | |
| | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 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. | |
All values are in US Dollars.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended March 27, 2020
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | Adjustments | | | | | ||||||||||
| | | | | Acquisition- | | Restructuring | | | | | | | | | ||||
| | | | | Related | | and Other | | Impairment | | | | Adjusted | | |||||
| | U.S. GAAP | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | | of Goodwill ^(1)^ | **** | Tax Items ^(2)^ | **** | (Non-GAAP) ^(4)^ | | |||||
| | ( in millions, except per share data) | | ||||||||||||||||
| Operating income (loss): | | | | | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 10 | | $ | 18 | | $ | 900 | | $ | — | | $ | 322 | | |
| Industrial Solutions | | | | | 2 | | | 1 | | | — | | | — | | | 145 | |
| Communications Solutions | | | | | — | | | 3 | | | — | | | — | | | 52 | |
| Total | | | $ | 12 | | $ | 22 | | $ | 900 | | $ | — | | $ | 519 | | |
| | | | | | | | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | | | | | | | 16.2 | % |
| | | | | | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | — | | $ | (8) | | $ | 3 | | |
| | | | | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (2) | | $ | (4) | | $ | (4) | | $ | (31) | | $ | (83) | | |
| | | | | | | | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | | | | | | | 16.1 | % |
| | | | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | | $ | 10 | | $ | 18 | | $ | 896 | | $ | (39) | | $ | 433 | | |
| | | | | | | | | | | | | | | | | | | |
| Diluted earnings (loss) per share from continuing operations ^(3)^ | | | $ | 0.03 | | $ | 0.05 | | $ | 2.67 | | $ | (0.12) | | $ | 1.29 | | |
| | | | | | | | | | | | | | | | | | | |
| ^(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 an income tax benefit related to pre-separation tax matters and the termination of the tax sharing agreement with Tyco International and Covidien, as well as the related impact to net other income. | | |||||||||||||||||
| ^(3)^ U.S. GAAP diluted shares excludes one 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 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 | | | $ | 10 | | $ | 128 | | $ | — | | $ | 844 | | |
| Industrial Solutions | | | | | 7 | | | 43 | | | — | | | 237 | |
| Communications Solutions | | | | | — | | | 13 | | | — | | | 180 | |
| Total | | | $ | 17 | | $ | 184 | | $ | — | | $ | 1,261 | | |
| | | | | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | | | | 17.4 | % |
| | | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | — | | $ | 3 | | |
| | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (4) | | $ | (34) | | $ | (29) | | $ | (233) | | |
| | | | | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | | | | 18.7 | % |
| | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 13 | | $ | 150 | | $ | (29) | | $ | 1,014 | | |
| | | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 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. | |
All values are in US Dollars.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Six Months Ended March 27, 2020
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | Adjustments | | | | | ||||||||||
| | | | | Acquisition- | | Restructuring | | | | | | | | |||||
| | | | | Related | | and Other | | Impairment | | | | Adjusted | | |||||
| | U.S. GAAP | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | of Goodwill ^(1)^ | **** | Tax Items^(2)^ | **** | (Non-GAAP) ^(4)^ | | |||||
| | ( in millions, except per share data) | | ||||||||||||||||
| Operating income (loss): | | | | | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 15 | | $ | 22 | | $ | 900 | | $ | — | | $ | 647 | | |
| Industrial Solutions | | | | | 4 | | | 16 | | | — | | | — | | | 277 | |
| Communications Solutions | | | | | — | | | 8 | | | — | | | — | | | 97 | |
| Total | | | $ | 19 | | $ | 46 | | $ | 900 | | $ | — | | $ | 1,021 | | |
| | | | | | | | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | | | | | | | 16.0 | % |
| | | | | | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | — | | $ | (8) | | $ | 8 | | |
| | | | | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (3) | | $ | (4) | | $ | (4) | | $ | 324 | | $ | (176) | | |
| | | | | | | | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | | | | | | | 17.3 | % |
| | | | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | | $ | 16 | | $ | 42 | | $ | 896 | | $ | 316 | | $ | 841 | | |
| | | | | | | | | | | | | | | | | | | |
| Diluted earnings (loss) per share from continuing operations ^(3)^ | | | $ | 0.05 | | $ | 0.13 | | $ | 2.67 | | $ | 0.94 | | $ | 2.50 | | |
| | | | | | | | | | | | | | | | | | | |
| ^(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 income tax expense related to the tax impacts of certain measures of Swiss tax reform. Also includes an income tax benefit related to pre-separation tax matters and the termination of the tax sharing agreement with Tyco International and Covidien, as well as the related impact to net other income. | | |||||||||||||||||
| ^(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 June 26, 2020
(UNAUDITED)
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | Adjustments | | | | | |||||||
| | | | | Acquisition- | | Restructuring | | | | | | ||||
| | | | | Related | | and Other | | | | Adjusted | | ||||
| | U.S. GAAP | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | Tax Items ^(2)^ | **** | (Non-GAAP) ^(4)^ | | ||||
| | ( in millions, except per share data) | | |||||||||||||
| Operating income (loss): | | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | 6 | | $ | 55 | | $ | — | | $ | 60 | | |
| Industrial Solutions | | | | | 2 | | | 40 | | | — | | | 112 | |
| Communications Solutions | | | | | — | | | 3 | | | — | | | 68 | |
| Total | | | $ | 8 | | $ | 98 | | $ | — | | $ | 240 | | |
| | | | | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | | | | 9.4 | % |
| | | | | | | | | | | | | | | | |
| Other income, net | | | $ | — | | $ | — | | $ | — | | $ | 4 | | |
| | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (1) | | $ | (21) | | $ | 170 | | $ | (37) | | |
| | | | | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | | | | 15.9 | % |
| | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | | $ | 7 | | $ | 77 | | $ | 170 | | $ | 196 | | |
| | | | | | | | | | | | | | | | |
| Diluted earnings (loss) per share from continuing operations ^(3)^ | | | $ | 0.02 | | $ | 0.23 | | $ | 0.51 | | $ | 0.59 | | |
| | | | | | | | | | | | | | | | |
| ^(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 an increase to the valuation allowance for certain non-U.S. deferred tax assets. | | ||||||||||||||
| ^(3)^ U.S. GAAP diluted shares excludes one 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 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 FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of April 21, 2021
(UNAUDITED)
| | | | |
|---|---|---|---|
| | Outlook for | | |
| | Quarter Ending | | |
| | June 25, | | |
| | 2021 | | |
| Diluted earnings per share from continuing operations | $ | 1.51 | |
| Restructuring and other charges, net | | 0.04 | |
| Acquisition-related charges | | 0.02 | |
| Adjusted diluted earnings per share from continuing operations ^(1)^ | $ | 1.57 | |
| | | | |
| | | | |
| Net sales growth (decline) | | 45.2 | % |
| Translation | | (5.1) | |
| (Acquisitions) divestitures, net | | 0.4 | |
| Organic net sales growth (decline) ^(1)^ | | 40.5 | % |
| | | | |
| ^(1)^ See description of non-GAAP financial measures. |
Exhibit 99.2
| EVERY CONNECTION COUNTS<br>TE Connectivity<br>Second Quarter<br>2021 Earnings<br>April 21, 2021 |
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| 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 Q2 results above guidance with double digit Sales growth and<br>Record Adjusted EPS<br>• Sales of $3.7B, up 17% on a reported basis and 11% organically Y/Y<br>• Transportation up 15% organically Y/Y, with double-digit growth in all businesses<br>• Industrial down 4% organically Y/Y, driven by weakness in Comm Air as expected<br>• Communications up 29% organically Y/Y, with double-digit growth in both businesses<br>• Orders of $4.6B, up 36% Y/Y. Book to bill of 1.22<br>• Adjusted Operating Margins up 80bps Y/Y to 17%<br>• Record quarterly Adjusted EPS of $1.57, up 22% Y/Y driven by operational performance<br>• Q2 Free Cash Flow of $477M with ~$340M returned to shareholders<br>• Year to date free cash flow of ~$1B, a record for the first half<br>Q3 Guidance reflecting significant Y/Y growth and similar performance to Q2<br>• Q3 sales and Adjusted EPS expected to be similar to Q2 levels<br>• Sales of ~$3.7B compared to $2.5B in prior year<br>• Adjusted EPS of ~$1.57 versus $0.59 in prior year<br>Organic Net Sales Growth (Decline), Adjusted EPS, Adjusted Operating Margin and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations 3 |
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| Reported FY20 FY21 FY21 Q2 Growth<br>Q2 Q1 Q2 Y/Y Q/Q<br>Transportation 1,849 2,537 2,766 50% 9%<br>Industrial 1,051 956 1,126 7% 18%<br>Communications 467 556 678 45% 22%<br>Total TE 3,367 4,049 4,570 36% 13%<br>Book to Bill 1.05 1.15 1.22<br>Segment Orders Summary<br>($ in millions)<br>4<br>• Transportation and<br>Communications orders strength<br>reflecting market growth in all<br>regions and supply chain<br>replenishment<br>• Industrial Y/Y growth driven by<br>increases in Industrial Equipment,<br>with stabilization in Commercial<br>Aerospace and Medical<br>Orders Reflect Ongoing Economic Recovery and Supply Chain Replenishment |
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| Transportation Solutions<br>$1,857 $2,287<br>Q2 2020 Q2 2021<br>• Automotive organic sales growth of 14% with growth<br>in all regions, YTD content outperformance as<br>expected<br>• Commercial Transportation organic growth driven by<br>market growth and content gains due to stricter<br>emissions standards<br>• Sensors organic growth in all markets; 39% reported<br>growth includes the First Sensor acquisition<br>Y/Y Growth Rates Reported Organic<br>Automotive $1,630 19% 14%<br>Commercial<br>Transportation 382 30% 25%<br>Sensors 275 39% 13%<br>Transportation<br>Solutions $2,287 23% 15%<br>Q2 Sales Q2 Business Performance<br>Q2 Adjusted Operating Margin<br>$ in Millions<br>Reported<br>Up 23%<br>Organic<br>Up 15%<br>Adjusted Operating<br>Margin expansion on<br>higher volumes<br>Adjusted EBITDA Margin 23.6% 23.7%<br>5<br>17.3% 18.1%<br>Q2 2020 Q2 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>$962 $952<br>Q2 2020 Q2 2021<br>Y/Y Growth Rates Reported Organic<br>Aerospace, Defense<br>and Marine $267 (16)% (21)%<br>Industrial Equipment 339 21% 16%<br>Medical 161 (13)% (13)%<br>Energy 185 4% 4%<br>Industrial Solutions $952 (1)% (4)%<br>Adjusted Operating<br>Margin declines<br>driven by lower<br>AD&M volume<br>15.1% 12.5%<br>Q2 2020 Q2 2021<br>Adjusted EBITDA Margin 19.9% 17.4%<br>• AD&M decline driven by continued weakness in the<br>Commercial Aerospace market<br>• Industrial Equipment growth in all regions benefitting from<br>continued market recovery in factory automation<br>applications, driven by the semi and auto markets<br>• Medical impacted by ongoing delays in elective<br>procedures caused by Covid-19<br>• Energy organic growth driven by increases in solar<br>applications<br>$ in Millions<br>Q2 Sales Q2 Business Performance<br>Q2 Adjusted Operating Margin<br>Reported<br>Down 1%<br>Organic<br>Down 4%<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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| $376<br>$499<br>Q2 2020 Q2 2021<br>Reported<br>Up 33%<br>Organic<br>Up 29%<br>Y/Y Growth Rates Reported Organic<br>Data & Devices $278 28% 24%<br>Appliances $221 40% 35%<br>Communications<br>Solutions $499 33% 29%<br>• Data & Devices growth driven by market strength<br>as well as share gains and content growth from<br>high-speed cloud applications<br>• Appliances growth driven by strong market<br>improvement in all regions, as well as share gains<br>13.8%<br>21.0%<br>Q2 2020 Q2 2021<br>Adjusted Operating<br>Margin expansion<br>driven by strong<br>operational<br>performance<br>Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non-GAAP financial measures: see Appendix for descriptions and reconciliations<br>Communications Solutions<br>Q2 Sales<br>Q2 Adjusted Operating Margin<br>Q2 Business Performance<br>$ in Millions<br>Adjusted EBITDA Margin 18.4% 24.6%<br>7 |
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| Q2 Financial Summary<br>($ in Millions, except per share amounts) Q2 FY20 Q2 FY21<br>Net Sales $ 3,195 $ 3,738<br>Operating Income (Loss) $ (415) $ 612<br>Operating Margin (13.0%) 16.4%<br>Acquisition-Related Charges 12 8<br>Restructuring & Other Charges, Net 22 17<br>Impairment of Goodwill 900 -<br>Adjusted Operating Income $ 519 $ 637<br>Adjusted Operating Margin 16.2% 17.0%<br>Earnings (Loss) Per Share* $ (1.35) $ 1.51<br>Acquisition-Related Charges 0.03 0.02<br>Restructuring & Other Charges, Net 0.05 0.04<br>Impairment of Goodwill 2.67 -<br>Tax Items (0.12) -<br>Adjusted EPS $ 1.29 $ 1.57<br>* Represents Diluted Earnings (Loss) Per Share from Continuing Operations.<br>Adjusted Operating Income, Adjusted Operating Margin and Adjusted EPS are non-GAAP financial measures; see Appendix for descriptions and reconciliations. 8 |
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| Q2 Financial Performance<br>$3,195 $3,522 $3,738<br>Q2 2020 Q1 2021 Q2 2021<br>$1.29 $1.47 $1.57<br>Q2 2020 Q1 2021 Q2 2021<br>Adjusted<br>EBITDA<br>Margin<br>21.9% 23.0% 22.2%<br>16.2% 17.7% 17.0%<br>Q2 2020 Q1 2021 Q2 2021<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 Business Model Execution Despite Supply Chain Pressures<br>9<br>$554<br>$1,006<br>YTD 2020 YTD 2021<br>$ in Millions<br>$ in Millions |
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| EVERY CONNECTION COUNTS<br>Additional<br>Information |
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| Y/Y Q2 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>Q2 2020 Results $3,195 $1.29<br>Operational Performance 393 0.22<br>FX Impact 150 0.08<br>Tax Rate Impact -(0.02)<br>Q2 2021 Results $3,738 $1.57<br>11 |
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| Y/Y Q3 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>Q3 2020 Results $2,548 $0.59<br>Operational Performance 1,044 1.01<br>FX Impact 108 0.01<br>Tax Rate Impact -(0.04)<br>Q3 2021 Guidance $3,700 $1.57<br>12 |
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| ($ in Millions) Q2 2020 Q2 2021<br>Beginning Cash Balance $742 $1,098<br>Free Cash Flow 311 477<br>Dividends (153) (159)<br>Share repurchases (269) (140)<br>Net increase in debt 383 411<br>Acquisition of businesses, net of cash<br>acquired (244) -<br>Other 26 61<br>Ending Cash Balance $796 $1,748<br>Total Debt $4,355 $4,521<br>A/R $2,461 $2,921<br>Days Sales Outstanding* 69 70<br>Inventory $2,001 $2,134<br>Days on Hand* 80 74<br>Accounts Payable $1,390 $1,793<br>Days Outstanding* 58 64<br>Free Cash Flow and Working Capital Liquidity, Cash and Debt<br>($ in Millions) Q2 2020 Q2 2021<br>Cash from Continuing Operating<br>Activities $481 $580<br>Capital expenditures, net (132) (85)<br>Cash collected pursuant to collateral<br>requirements related to cross-currency<br>swap contracts (38) (18)<br>Free Cash Flow $311 $477<br>Free Cash Flow is a non-GAAP financial measure, see Appendix for description and reconciliation<br>* Adjusted to exclude the impact of acquisitions<br>Q2 Balance Sheet & Cash Flow Summary<br>13 |
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| EVERY CONNECTION COUNTS<br>Appendix |
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| 15<br>Non-GAAP Financial Measures<br>We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in<br>accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures provide supplemental information and should not be<br>considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its<br>decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance<br>the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe that investors benefit from having access to<br>the same financial measures that management uses in evaluating our operations. The primary limitation of these measures is that they exclude the financial impact of items<br>that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the<br>most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These<br>non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies.<br>The following provides additional information regarding our non-GAAP financial measures:<br>• Organic Net Sales Growth (Decline) – represents net sales growth (decline) (the most comparable GAAP financial measure) excluding the impact of foreign currency<br>exchange rates, and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic Net Sales Growth (Decline) is a useful measure of our<br>performance because it excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items<br>that do not reflect the underlying growth of the company, such as acquisition and divestiture activity. This measure is a significant component in our incentive compensation<br>plans.<br>• Adjusted Operating Income (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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| 16<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>17<br><br><br>Transportation Solutions $ 2,287 $ 1,857 $ 4,511 $ 3,725<br>Industrial Solutions 952 962 1,825 1,889<br>Communications Solutions 499 376 924 749<br>Total $ 3,738 $ 3,195 $ 7,260 $ 6,363<br>Transportation Solutions $ 398 17.4 % $ (606) (32.6) % $ 706 15.7 % $ (290) (7.8) %<br>Industrial Solutions 111 11.7 142 14.8 187 10.2 257 13.6<br>Communications Solutions 103 20.6 49 13.0 167 18.1 89 11.9<br>Total $ 612 16.4 % $ (415) (13.0) % $ 1,060 14.6 % $ 56 0.9 %<br>Transportation Solutions $ 413 18.1 % $ 322 17.3 % $ 844 18.7 % $ 647 17.4 %<br>Industrial Solutions 119 12.5 145 15.1 237 13.0 277 14.7<br>Communications Solutions 105 21.0 52 13.8 180 19.5 97 13.0<br>Total $ 637 17.0 % $ 519 16.2 % $ 1,261 17.4 % $ 1,021 16.0 %<br>2021<br>For the Six Months Ended<br>2020<br>For the Quarters Ended<br>March 26, March 27, March 26, March 27,<br>Net Sales<br>Operating<br>Income (Loss)<br>Net Sales Net Sales Net Sales<br>Income (1)<br>Adjusted<br>Operating<br>Income (1)<br>Income<br>Operating Operating<br>Income (Loss)<br>Operating<br>Income<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>Income (1)<br>Operating<br>Margin<br>Operating<br>Margin<br>Operating<br>Margin<br>Operating<br>Margin<br>Adjusted<br>Operating<br>Margin (1)<br>Adjusted<br>Operating<br>Margin (1)<br>Adjusted |
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| Reconciliation of Net Sales Growth<br>18<br><br>Transportation Solutions (3):<br>Automotive $ 265 19.4 % $ 184 13.5 % $ 81 $ —<br>Commercial transportation 88 29.9 73 24.8 15 —<br>Sensors 77 38.9 27 13.4 8 42<br>Total 430 23.2 284 15.3 104 42<br>Industrial Solutions (3):<br>Aerospace, defense, oil, and gas (51) (16.0) (66) (20.8) 7 8<br>Industrial equipment 59 21.1 44 15.7 15 —<br>Medical (25) (13.4) (25) (13.4) — —<br>Energy 7 3.9 7 4.0 9 (9)<br>Total (10) (1.0) (40) (4.2) 31 (1)<br>Communications Solutions (3):<br>Data and devices 60 27.5 52 24.0 8 —<br>Appliances 63 39.9 56 35.3 7 —<br>Total 123 32.7 108 28.7 15 —<br>Total $ 543 17.0 % $ 352 11.0 % $ 150 $ 41<br>Transportation Solutions (3):<br>Automotive $ 489 17.7 % $ 345 12.4 % $ 144 $ -<br>Commercial transportation 161 29.2 138 24.9 23 -<br>Sensors 136 33.7 34 8.2 13 89<br>Total 786 21.1 517 13.8 180 89<br>Industrial Solutions (3):<br>Aerospace, defense, oil, and gas (110) (17.5) (134) (21.4) 13 11<br>Industrial equipment 91 16.8 65 11.8 26 -<br>Medical (48) (13.2) (49) (13.5) 1 -<br>Energy 3 0.8 - 0.1 12 (9)<br>Total (64) (3.4) (118) (6.3) 52 2<br>Communications Solutions (3):<br>Data and devices 75 17.2 62 14.4 13 -<br>Appliances 100 32.1 89 28.3 11 -<br>Total 175 23.4 151 20.2 24 -<br>Total $ 897 14.1 % $ 550 8.6 % $ 256 $ 91<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 March 26, 2021<br>versus Net Sales for the Quarter Ended March 27, 2020<br>Net Sales Organic Net Sales Acquisitions/<br>Growth (Decline) Growth (Decline) (1) Translation (2) (Divestiture)<br>Change in Net Sales for the Six Months Ended March 26, 2021<br>versus Net Sales for the Six Months Ended March 27, 2020<br>($ in millions)<br>Translation (2)<br>Acquisitions/<br>(Divestiture) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended March 26, 2021<br>19<br><br>Operating income:<br>Transportation Solutions $ 398 $ 5 $ 10 $ 413<br>Industrial Solutions 111 3 5 119<br>Communications Solutions 103 — 2 105<br>Total $ 612 $ 8 $ 17 $ 637<br>Operating margin 16.4 % 17.0 %<br>Other income, net $ 4 $ — $ — $ 4<br>Income tax expense $ (106) $ (2) $ (2) $ (110)<br>Effective tax rate 17.3 % 17.3 %<br>Income from continuing operations $ 505 $ 6 $ 15 $ 526<br>Diluted earnings per share from continuing operations $ 1.51 $ 0.02 $ 0.04 $ 1.57<br><br>(2) See description of non-GAAP financial measures.<br>(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in<br>effect for each such jurisdiction.<br>U.S. GAAP Charges (1) (Non-GAAP) (2) Charges, Net (1)<br>($ in millions, except per share data)<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 March 27, 2020<br>20<br><br>Operating income (loss):<br>Transportation Solutions $ (606) $ 10 $ 18 $ 900 $ — $ 322<br>Industrial Solutions 142 2 1 — — 145<br>Communications Solutions 49 — 3 — — 52<br>Total $ (415) $ 12 $ 22 $ 900 $ — $ 519<br>Operating margin (13.0) % 16.2 %<br>Other income, net $ 11 $ — $ — $ — $ (8) $ 3<br>Income tax expense $ (42) $ (2) $ (4) $ (4) $ (31) $ (83)<br>Effective tax rate (10.2) % 16.1 %<br>Income (loss) from continuing<br>operations $ (452) $ 10 $ 18 $ 896 $ (39) $ 433<br>Diluted earnings (loss) per share from<br>continuing operations (3) $ (1.35) $ 0.03 $ 0.05 $ 2.67 $ (0.12) $ 1.29<br>(4) See description of non-GAAP financial measures.<br>U.S. GAAP<br>Acquisition-<br>Related<br>Charges (1)<br>Adjustments<br>Impairment<br>of Goodwill (1)<br>(3) U.S. GAAP diluted shares excludes one million of nonvested share awards and options outstanding as the inclusion of these securities would have been<br>antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares.<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<br>such jurisdiction.<br>(2) Includes an income tax benefit related to pre-separation tax matters and the termination of the tax sharing agreement with Tyco International and Covidien, as<br>well as the related impact to net other income.<br>Adjusted<br>(Non-GAAP) (4)<br>($ in millions, except per share data)<br>Restructuring<br>and Other<br>Charges, Net (1) Tax Items (2) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Six Months Ended March 26, 2021<br>21<br><br>Operating income:<br>Transportation Solutions $ 706 $ 10 $ 128 $ — $ 844<br>Industrial Solutions 187 7 43 — 237<br>Communications Solutions 167 — 13 — 180<br>Total $ 1,060 $ 17 $ 184 $ — $ 1,261<br>Operating margin 14.6 % 17.4 %<br>Other income, net $ 3 $ — $ — $ — $ 3<br>Income tax expense $ (166) $ (4) $ (34) $ (29) $ (233)<br>Effective tax rate 15.9 % 18.7 %<br>Income from continuing operations $ 880 $ 13 $ 150 $ (29) $ 1,014<br>Diluted earnings per share from<br>continuing operations $ 2.64 $ 0.04 $ 0.45 $ (0.09) $ 3.05<br>Adjustments<br>Acquisition- Restructuring<br>Related and Other Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1) Tax Items (2) (Non-GAAP) (3)<br>(3) 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<br>for each such jurisdiction.<br>(2) Income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets. |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Six Months Ended March 27, 2020<br>22<br><br>Operating income (loss):<br>Transportation Solutions $ (290) $ 15 $ 22 $ 900 $ — $ 647<br>Industrial Solutions 257 4 16 — — 277<br>Communications Solutions 89 — 8 — — 97<br>Total $ 56 $ 19 $ 46 $ 900 $ — $ 1,021<br>Operating margin 0.9 % 16.0 %<br>Other income, net $ 16 $ — $ — $ — $ (8) $ 8<br>Income tax expense $ (489) $ (3) $ (4) $ (4) $ 324 $ (176)<br>Effective tax rate 815.0 % 17.3 %<br>Income (loss) from continuing operations $ (429) $ 16 $ 42 $ 896 $ 316 $ 841<br>Diluted earnings (loss) per share from<br>continuing operations (3) $ (1.28) $ 0.05 $ 0.13 $ 2.67 $ 0.94 $ 2.50<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 income tax expense related to the tax impacts of certain measures of Swiss tax reform. Also includes an income tax benefit related to pre-separation tax matters<br>and the termination of the tax sharing agreement with Tyco International and Covidien, as well as the related impact to net other income.<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 June 26, 2020<br>23<br><br>Operating income (loss):<br>Transportation Solutions $ (1) $ 6 $ 55 $ — $ 60<br>Industrial Solutions 70 2 40 — 112<br>Communications Solutions 65 — 3 — 68<br>Total $ 134 $ 8 $ 98 $ — $ 240<br>Operating margin 5.3 % 9.4 %<br>Other income, net $ 4 $ — $ — $ — $ 4<br>Income tax expense $ (185) $ (1) $ (21) $ 170 $ (37)<br>Effective tax rate 145.7 % 15.9 %<br>Income (loss) from continuing operations $ (58) $ 7 $ 77 $ 170 $ 196<br>Diluted earnings (loss) per share from<br>continuing operations (3) $ (0.18) $ 0.02 $ 0.23 $ 0.51 $ 0.59<br>(4) See description of non-GAAP financial measures.<br>U.S. GAAP<br>Acquisition-<br>Related<br>Charges (1)<br>Adjustments<br>(3) U.S. GAAP diluted shares excludes one million of nonvested share awards and options outstanding as the inclusion of these securities would have been<br>antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares.<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<br>for each such jurisdiction.<br>(2) Income tax expense related to an increase to the valuation allowance for certain non-U.S. deferred tax assets.<br>Adjusted<br>(Non-GAAP) (4)<br>($ in millions, except per share data)<br>Restructuring<br>and Other<br>Charges, Net (1) Tax Items (2) |
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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<br>continuing operations $ 1.13 $ 0.02 $ 0.41 $ (0.09) $ 1.47<br><br>Acquisition- Restructuring<br>Adjustments<br>($ in millions, except per share data)<br>(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect<br>for each such 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>(3) See description of non-GAAP financial measures.<br>Related and Other Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1) Tax Items (2) (Non-GAAP) (3) |
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| Reconciliation of Free Cash Flow<br>25<br>Net cash provided by operating activities $ 580 $ 481 $ 1,220 $ 892<br>Net cash used in investing activities (77) (378) (323) (667)<br>Net cash provided by (used in) financing activities 151 (31) (101) (345)<br>Effect of currency translation on cash (4) (18) 7 (11)<br>Net increase (decrease) in cash, cash equivalents, and restricted cash $ 650 $ 54 $ 803 $ (131)<br>Net cash provided by continuing operating activities $ 580 $ 481 $ 1,220 $ 892<br>Excluding:<br>Cash (collected) paid pursuant to collateral requirements related<br>to cross-currency swap contracts (18) (38) 12 (32)<br>Capital expenditures, net (85) (132) (226) (306)<br>Free cash flow (1) $ 477 $ 311 $ 1,006 $ 554<br>For the Quarters Ended For the Six Months Ended<br>March 26, March 27, March 26, March 27,<br>(in millions)<br>(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.<br>2021 2020 2021 2020 |
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| Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin<br>26<br>Net income (loss) $ 506 $ 381 $ (456)<br>(Income) loss from discontinued operations (1) (6) 4<br>Income tax expense 106 60 42<br>Other (income) expense, net (4) 1 (11)<br>Interest expense 13 15 11<br>Interest income (8) (3) (5)<br>Operating income (loss) 612 448 (415)<br>Acquisition-related charges 8 9 12<br>Restructuring and other charges, net 17 167 22<br>Impairment of goodwill — — 900<br>Adjusted operating income (1) 637 624 519<br>Depreciation and amortization 193 187 180<br>Adjusted EBITDA (1) $ 830 $ 811 $ 699<br>Net sales $ 3,738 $ 3,522 $ 3,195<br>Net income as a percentage of net sales 13.5 % 10.8 %(14.3) %<br>Adjusted EBITDA margin (1) 22.2 % 23.0 % 21.9 %<br>Operating income (loss) $ 398 $ 111 $ 103 $ 612 $ (606) $ 142 $ 49 $ (415)<br>Acquisition-related charges 5 3 — 8 10 2 — 12<br>Restructuring and other charges, net 10 5 2 17 18 1 3 22<br>Impairment of goodwill — — — — 900 — — 900<br>Adjusted operating income (1) 413 119 105 637 322 145 52 519<br>Depreciation and amortization 128 47 18 193 117 46 17 180<br>Adjusted EBITDA (1) $ 541 $ 166 $ 123 $ 830 $ 439 $ 191 $ 69 $ 699<br>Net sales $ 2,287 $ 952 $ 499 $ 3,738 $ 1,857 $ 962 $ 376 $ 3,195<br>Operating margin 17.4 % 11.7 % 20.6 % 16.4 %(32.6) % 14.8 % 13.0 %(13.0) %<br>Adjusted operating margin (1) 18.1 % 12.5 % 21.0 % 17.0 % 17.3 % 15.1 % 13.8 % 16.2 %<br>Adjusted EBITDA margin (1) 23.7 % 17.4 % 24.6 % 22.2 % 23.6 % 19.9 % 18.4 % 21.9 %<br>Solutions Solutions<br>Communications<br>For the Quarters Ended<br>March 26, 2021 March 27, 2020<br>March 26,<br>2021 2020<br>December 25, March 27,<br>2020<br>($ in millions)<br>For the Quarters 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 Solutions<br>Transportation Industrial |
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| Reconciliation of Forward-Looking Non-GAAP Financial Measures<br>to Forward-Looking GAAP Financial Measures<br>27<br>Diluted earnings per share from continuing operations $ 1.51<br>Restructuring and other charges, net 0.04<br>Acquisition-related charges 0.02<br>Adjusted diluted earnings per share from continuing operations (2) $ 1.57<br>Net sales growth (decline) 45.2 %<br>Translation (5.1)<br>(Acquisitions) divestitures, net 0.4<br>Organic net sales growth (decline) (2) 40.5 %<br>Effective tax rate 17.5 %<br>Effective tax rate adjustments (3) 1.5<br>Adjusted effective tax rate (2) 19.0 %<br>Quarter Ending<br>Outlook for<br>(1) Outlook is as of April 21, 2021.<br>(2) See description of non-GAAP financial measures.<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>June 25,<br>2021 (1)<br>Outlook for<br>Fiscal 2021 (1) |
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