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): January 22, 2025
TE CONNECTIVITY PLC
(Exact name of registrant as specified in its charter)
| | | |
|---|---|---|
| Ireland | | 98-1779916 |
| (Jurisdiction of Incorporation) | | (IRS Employer Identification Number) |
001-33260
(Commission File Number)
Parkmore Business Park West ****
Parkmore , Ballybrit
Galway , H91VN2T , Ireland
(Address of Principal Executive Offices, including Zip Code)
+353 **** 91 **** 378 040
(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 |
| Ordinary Shares, Par Value $0.01 | | TEL | | New York Stock Exchange |
| 0.00% Senior Notes due 2025* | | TEL/25 | | New York Stock Exchange |
| 0.00% Senior Notes due 2029* | | TEL/29 | | New York Stock Exchange |
*Issued by Tyco Electronics Group S.A., an indirect wholly-owned subsidiary of TE Connectivity plc
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 January 22, 2025, TE Connectivity plc (the “Company”) issued a press release reporting the Company’s first quarter results for fiscal 2025. 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 January 22, 2025 (see information in the press release attached hereto as Exhibit 99.1 under “Conference Call and Webcast”). A copy of the slide materials to be discussed at the conference call and webcast is being furnished pursuant to Regulation FD as Exhibit 99.2 and is incorporated herein by reference, and the slide materials also can be accessed at the “Investors” section of the Company’s website (www.te.com).
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | **** | Description |
|---|---|---|
| 99.1 | Press release issued January 22, 2025 | |
| 99.2 | Presentation - TE Connectivity Q1 2025 Earnings Call (January 22, 2025) | |
| | | |
| 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: January 22, 2025 | TE CONNECTIVITY PLC | |
| | | |
| | By: | /s/ Heath A. Mitts<br><br>Heath A. Mitts<br>Executive Vice President and Chief Financial Officer |
Exhibit 99.1
NEWS RELEASE
te.com
TE Connectivity announces first quarter results for fiscal year 2025 EPS above guidance with record first quarter cash generation
GALWAY, Ireland – Jan. 22, 2025 – TE Connectivity plc (NYSE: TEL) today reported results for the fiscal first quarter ended Dec. 27, 2024.
First Quarter Highlights
| ● | Net sales were $3.84 billion, flat year over year and as expected on an organic basis. |
|---|---|
| ● | Compared to guidance, sales were unfavorably impacted by increased currency exchange headwinds. |
| --- | --- |
| ● | Earnings per share (EPS) above guidance, with GAAP diluted EPS from continuing operations at $1.75. Adjusted EPS was $1.95, up approximately 6% year over year. |
| --- | --- |
| ● | Orders of $4.0 billion, up 6% year over year and 4% sequentially, driven by the Industrial segment, with increased momentum in artificial intelligence programs. |
| --- | --- |
| ● | Operating margin was 18% and adjusted operating margin was a quarterly record at 19.4%, driven by strong operational execution. |
| --- | --- |
| ● | Record first quarter cash generation, including: |
| --- | --- |
| ● | Cash from operating activities of $878 million, up 22% year over year. |
| --- | --- |
| ● | Free cash flow of $674 million, up 18% year over year. |
| --- | --- |
| ● | Returned approximately $500 million to shareholders and deployed $325 million for bolt-on acquisitions in the Industrial segment. |
| --- | --- |
| ● | Named to Dow Jones Sustainability Index for the 13^th^ consecutive year. |
| --- | --- |
“I’m pleased that our team began the fiscal year with a strong operational performance, highlighted by adjusted EPS above guidance and records in both adjusted operating margin and first quarter free cash flow,” said TE Connectivity CEO Terrence Curtin. “In our Transportation segment, we continued to navigate an uneven global vehicle production environment to deliver a strong result while continuing to innovate with our global customers in growth trends such as electrification and next-generation vehicle data connectivity. We delivered double digit sales growth in our Industrial segment and expanded margins, driven by momentum in AI programs across multiple customers, as well as capitalizing on ongoing strength in our AD&M and Energy businesses.
“As we continue our operational excellence and innovate with our valued customers, we expect second quarter sales to be up sequentially and adjusted EPS to be up year over year and compared to the first quarter. We remain excited about capitalizing on long-term growth opportunities, including our bolt-on acquisition strategy and margin expansion plans, to keep delivering on our value creation model.”
Second Quarter FY25 Outlook
For the second quarter of fiscal 2025, the company expects net sales of approximately $3.95 billion. GAAP EPS from continuing operations is expected to be approximately ($0.05), which includes a one-time non-cash tax charge due to changes in tax law in the second quarter of 2025. Adjusted EPS is expected to be approximately $1.96, up 5% year over year. Second quarter guidance includes $0.06 of currency exchange and tax headwinds compared to the prior year.
Beginning this fiscal year, the company has two reportable segments – Transportation Solutions and Industrial Solutions – resulting from a reorganization announced in the fourth quarter of fiscal 2024. The company provided recast financial information in an 8-K filing on Dec. 17, 2024.
Information about TE Connectivity's use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables.
Conference Call and Webcast
The company will hold a conference call for investors today beginning at 8:30 a.m. ET. The conference call may be accessed in the following ways:
| ● | At TE Connectivity's website: investors.te.com |
|---|---|
| ● | By telephone: For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the dial-in number in the United States is (800) 715-9871 and for international callers, the dial-in number is (646) 307-1963 |
| --- | --- |
| ● | 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 Jan. 22. |
| --- | --- |
About TE Connectivity
TE Connectivity plc (NYSE: TEL) is a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of connectivity and sensor solutions enable the distribution of power, signal and data to advance next-generation transportation, renewable energy, automated factories, data centers, medical technology and more. With more than 85,000 employees, including 9,000 engineers, working alongside customers in approximately 130 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedIn, Facebook, WeChat, Instagram and X (formerly Twitter).
Non-GAAP Financial Measures
We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures provide supplemental information and should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe that investors benefit from having access to the same financial measures that management uses in evaluating our operations. The primary limitation of these measures is that they exclude the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies.
The following provides additional information regarding our non-GAAP financial measures:
•Organic Net Sales Growth (Decline) – represents net sales growth (decline) (the most comparable GAAP financial measure) excluding the impact of foreign currency exchange rates, and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic Net Sales Growth (Decline) is a useful measure of our performance because it excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition and divestiture activity. This measure is a significant component in our incentive compensation plans.
•Adjusted Operating Income and Adjusted Operating Margin – represent operating income and operating margin, respectively, (the most comparable GAAP financial measures) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if any. We utilize these adjusted measures in combination with operating income and operating margin to assess segment level operating performance and to provide insight to management in evaluating segment operating plan execution and market conditions. Adjusted Operating Income is a significant component in our incentive compensation plans.
•Adjusted Income Tax (Expense) Benefit and Adjusted Effective Tax Rate – represent income tax (expense) benefit and effective tax rate, respectively, (the most comparable GAAP financial measures) after adjusting for the tax effect of special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, other income or charges, and certain significant tax items, if any.
•Adjusted Income from Continuing Operations – represents income from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, 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 (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, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects. This measure is a significant component in our incentive compensation plans.
•Free Cash Flow (FCF) – is a useful measure of our ability to generate cash. The difference between net cash provided by operating activities (the most comparable GAAP financial measure) and Free Cash Flow consists mainly of significant cash outflows and inflows that we believe are useful to identify. We believe Free Cash Flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated from our operations. Free Cash Flow is defined as net cash provided by operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Voluntary pension contributions are excluded from the GAAP financial measure because this activity is driven by economic financing decisions rather than operating activity. Certain special items, including 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. 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 business interruptions 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 in certain parts of the world; 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. In addition, our change of incorporation from Switzerland to Ireland is subject to risks, such as the risk that the anticipated advantages might not materialize, as well as the risks that the price of our stock could decline and our position on stock exchanges and indices could change, and Irish corporate governance and regulatory schemes could prove different or more challenging than currently expected. More detailed information about these and other factors is set forth in TE Connectivity plc’s Annual Report on Form 10-K for the fiscal year ended Sept 27, 2024, as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.
| <br><br><br><br><br><br><br><br> | <br><br><br><br><br><br><br><br> | |
|---|---|---|
| Contacts: | Media Relations :<br><br>Eric Mangan<br><br>TE Connectivity<br><br>908-783-6629<br><br>Eric.Mangan@te.com | Investor Relations :<br><br>Sujal Shah<br><br>TE Connectivity<br><br>610-893-9790<br><br>Sujal.Shah@te.com |
TE CONNECTIVITY PLC
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| | | | | | |
|---|---|---|---|---|---|
| | For the Quarters Ended | ||||
| | December 27, | | December 29, | ||
| | 2024 | 2023 | |||
| | (in millions, except per share data) | ||||
| Net sales | $ | 3,836 | | $ | 3,831 |
| Cost of sales | | 2,476 | | | 2,507 |
| Gross margin | | 1,360 | | | 1,324 |
| Selling, general, and administrative expenses | | 427 | | | 424 |
| Research, development, and engineering expenses | | 188 | | | 173 |
| Acquisition and integration costs | | 5 | | | 8 |
| Restructuring and other charges, net | | 50 | | | 21 |
| Operating income | | 690 | | | 698 |
| Interest income | | 23 | | | 22 |
| Interest expense | | (6) | | | (18) |
| Other expense, net | | (1) | | | (3) |
| Income from continuing operations before income taxes | | 706 | | | 699 |
| Income tax (expense) benefit | | (178) | | | 1,105 |
| Income from continuing operations | | 528 | | | 1,804 |
| Loss from discontinued operations, net of income taxes | | — | | | (1) |
| Net income | $ | 528 | | $ | 1,803 |
| | | | | | |
| Basic earnings per share: | | | | | |
| Income from continuing operations | $ | 1.77 | | $ | 5.80 |
| Net income | | 1.77 | | | 5.80 |
| | | | | | |
| Diluted earnings per share: | | | | | |
| Income from continuing operations | $ | 1.75 | | $ | 5.76 |
| Net income | | 1.75 | | | 5.76 |
| | | | | | |
| Weighted-average number of shares outstanding: | | | | | |
| Basic | | 299 | | | 311 |
| Diluted | | 301 | | | 313 |
TE CONNECTIVITY PLC
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | | | | |
|---|---|---|---|---|---|
| | December 27, | | September 27, | ||
| | 2024 | | 2024 | ||
| | (in millions, except share data) | ||||
| Assets | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | $ | 1,254 | | $ | 1,319 |
| Accounts receivable, net of allowance for doubtful accounts of $34 and $32, respectively | | 2,912 | | | 3,055 |
| Inventories | | 2,619 | | | 2,517 |
| Prepaid expenses and other current assets | | 734 | | | 740 |
| Total current assets | | 7,519 | | | 7,631 |
| Property, plant, and equipment, net | | 3,759 | | | 3,903 |
| Goodwill | | 5,835 | | | 5,801 |
| Intangible assets, net | | 1,177 | | | 1,174 |
| Deferred income taxes | | 3,270 | | | 3,497 |
| Other assets | | 881 | | | 848 |
| Total assets | $ | 22,441 | | $ | 22,854 |
| Liabilities, redeemable noncontrolling interests, and shareholders' equity | | | | | |
| Current liabilities: | | | | | |
| Short-term debt | $ | 920 | | $ | 871 |
| Accounts payable | | 1,859 | | | 1,728 |
| Accrued and other current liabilities | | 1,694 | | | 2,147 |
| Total current liabilities | | 4,473 | | | 4,746 |
| Long-term debt | | 3,285 | | | 3,332 |
| Long-term pension and postretirement liabilities | | 778 | | | 810 |
| Deferred income taxes | | 203 | | | 199 |
| Income taxes | | 396 | | | 411 |
| Other liabilities | | 773 | | | 870 |
| Total liabilities | | 9,908 | | | 10,368 |
| Commitments and contingencies | | | | | |
| Redeemable noncontrolling interests | | 124 | | | 131 |
| Shareholders' equity: | | | | | |
| Preferred shares, $1.00 par value, 2 shares authorized, none outstanding as of December 27, 2024 | | — | | | — |
| Ordinary class A shares, €1.00 par value, 25,000 shares authorized, none outstanding as of December 27, 2024 | | — | | | — |
| Ordinary shares, $0.01 par value, 1,500,000,000 shares authorized, 300,840,538 shares issued and common shares, CHF 0.57 par value, 316,574,781 shares authorized and issued, respectively | | 3 | | | 139 |
| Accumulated earnings | | 12,933 | | | 14,533 |
| Ordinary shares and common shares held in treasury, at cost, 2,074,979 and 16,656,681 shares, respectively | | (310) | | | (2,322) |
| Accumulated other comprehensive income (loss) | | (217) | | | 5 |
| Total shareholders' equity | | 12,409 | | | 12,355 |
| Total liabilities, redeemable noncontrolling interests, and shareholders' equity | $ | 22,441 | | $ | 22,854 |
TE CONNECTIVITY PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | | | | | |
|---|---|---|---|---|---|
| | For the Quarters Ended | ||||
| | December 27, | | December 29, | ||
| | 2024 | | 2023 | ||
| | (in millions) | ||||
| Cash flows from operating activities: | | | | | |
| Net income | $ | 528 | | $ | 1,803 |
| Loss from discontinued operations, net of income taxes | | — | | | 1 |
| Income from continuing operations | | 528 | | | 1,804 |
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | | 186 | | | 194 |
| Deferred income taxes | | 98 | | | (1,217) |
| Non-cash lease cost | | 34 | | | 34 |
| Provision for losses on accounts receivable and inventories | | 41 | | | 42 |
| Share-based compensation expense | | 35 | | | 34 |
| Other | | 12 | | | 40 |
| Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | | | | | |
| Accounts receivable, net | | 146 | | | 127 |
| Inventories | | (118) | | | (282) |
| Prepaid expenses and other current assets | | 68 | | | (48) |
| Accounts payable | | 150 | | | 128 |
| Accrued and other current liabilities | | (295) | | | (239) |
| Income taxes | | 30 | | | 12 |
| Other | | (37) | | | 90 |
| Net cash provided by operating activities | | 878 | | | 719 |
| Cash flows from investing activities: | | | | | |
| Capital expenditures | | (205) | | | (151) |
| Proceeds from sale of property, plant, and equipment | | 1 | | | 2 |
| Acquisition of businesses, net of cash acquired | | (325) | | | (349) |
| Proceeds from divestiture of business, net of cash retained by business sold | | — | | | 38 |
| Other | | (8) | | | (8) |
| Net cash used in investing activities | | (537) | | | (468) |
| Cash flows from financing activities: | | | | | |
| Net increase (decrease) in commercial paper | | 90 | | | (69) |
| Repayment of debt | | — | | | (1) |
| Proceeds from exercise of share options | | 34 | | | 11 |
| Repurchase of ordinary/common shares | | (303) | | | (476) |
| Payment of ordinary/common share dividends to shareholders | | (189) | | | (183) |
| Other | | (27) | | | (27) |
| Net cash used in financing activities | | (395) | | | (745) |
| Effect of currency translation on cash | | (11) | | | 3 |
| Net decrease in cash, cash equivalents, and restricted cash | | (65) | | | (491) |
| Cash, cash equivalents, and restricted cash at beginning of period | | 1,319 | | | 1,661 |
| Cash, cash equivalents, and restricted cash at end of period | $ | 1,254 | | $ | 1,170 |
| | | | | | |
| Supplemental cash flow information: | | | | | |
| Income taxes paid, net of refunds | | 49 | | | 100 |
TE CONNECTIVITY PLC
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
| | | | | | |
|---|---|---|---|---|---|
| | For the Quarters Ended | ||||
| | December 27, | | December 29, | ||
| | 2024 | | 2023 | ||
| | (in millions) | ||||
| Net cash provided by operating activities | $ | 878 | | $ | 719 |
| Capital expenditures, net | | (204) | | | (149) |
| Free cash flow ^(1)^ | $ | 674 | | $ | 570 |
| | | | | | |
| ^(1)^Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures. |
TE CONNECTIVITY PLC
SEGMENT DATA (UNAUDITED)
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | For the Quarters Ended | | ||||||||
| | December 27, | | | December 29, | | |||||
| | 2024 | | | 2023 | | |||||
| | ( in millions) | |||||||||
| | Net Sales | **** | | | | Net Sales | **** | | | |
| Transportation Solutions | | | | | $ | 2,393 | | | | |
| Industrial Solutions | | | | | | | 1,438 | | | |
| Total | | | | | $ | 3,831 | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | Operating | | Operating | | | Operating | | Operating | | |
| | Income | | Margin | | | Income | | Margin | | |
| Transportation Solutions | | 19.9 | % | | $ | 487 | | 20.4 | % | |
| Industrial Solutions | | | 15.3 | | | | 211 | | 14.7 | |
| Total | | 18.0 | % | | $ | 698 | | 18.2 | % | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | Adjusted | | Adjusted | | | Adjusted | | Adjusted | | |
| | Operating | | Operating | | | Operating | | Operating | | |
| | Income (1) | | Margin ^(1)^ | | | Income ^(1)^ | | Margin ^(1)^ | | |
| Transportation Solutions | | 21.3 | % | | $ | 504 | | 21.1 | % | |
| Industrial Solutions | | | 16.8 | | | | 227 | | 15.8 | |
| Total | | 19.4 | % | | $ | 731 | | 19.1 | % | |
| | | | | | | | | | | |
| ^(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 PLC
RECONCILIATION OF NET SALES GROWTH (DECLINE) (UNAUDITED)
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Change in Net Sales for the Quarter Ended December 27, 2024 | |||||||||||||||
| | versus Net Sales for the Quarter Ended December 29, 2023 | |||||||||||||||
| | Net Sales | | | Organic Net Sales | | | | | Acquisitions/ | |||||||
| | Growth (Decline) | | **** | Growth (Decline) ^(1)^ | | **** | Translation ^(2)^ | **** | (Divestiture) | |||||||
| | ( in millions) | |||||||||||||||
| Transportation Solutions ^(3)^: | | **** | | | | | | **** | | | | | | | | |
| Automotive | | (4.1) | % | | $ | (55) | | (3.0) | % | | $ | (7) | | $ | (12) | |
| Commercial transportation | | | (12.4) | | | | (41) | | (11.6) | | | | (3) | | | — |
| Sensors | | | (13.3) | | | | (30) | | (12.6) | | | | (2) | | | — |
| Total Transportation Solutions | | | (6.3) | | | | (126) | | (5.2) | | | | (12) | | | (12) |
| Industrial Solutions ^(3)^: | | | | | | | | | | | | | | | | |
| Automation and connected living | | | 3.2 | | | | (21) | | (4.5) | | | | (2) | | | 38 |
| Aerospace, defense, and marine | | | 15.2 | | | | 45 | | 15.4 | | | | (1) | | | — |
| Digital data networks | | | 48.0 | | | | 134 | | 48.0 | | | | — | | | — |
| Energy | | | 5.4 | | | | 14 | | 6.8 | | | | (3) | | | — |
| Medical | | | (24.5) | | | | (49) | | (24.5) | | | | — | | | — |
| Total Industrial Solutions | | | 10.8 | | | | 123 | | 8.6 | | | | (6) | | | 38 |
| Total | | 0.1 | % | | $ | (3) | | — | % | | $ | (18) | | $ | 26 | |
| | | | | | | | | | | | | | | | | |
| ^(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 PLC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended December 27, 2024
(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 | | | $ | — | | $ | 32 | | $ | — | | $ | 478 | | |
| Industrial Solutions | | | | | 5 | | | 18 | | | — | | | 267 | |
| Total | | | $ | 5 | | $ | 50 | | $ | — | | $ | 745 | | |
| | | | | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | | | | 19.4 | % |
| | | | | | | | | | | | | | | | |
| Income tax expense | | | $ | (1) | | $ | (9) | | $ | 13 | | $ | (175) | | |
| | | | | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | | | | 23.0 | % |
| | | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 4 | | $ | 41 | | $ | 13 | | $ | 586 | | |
| | | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.01 | | $ | 0.14 | | $ | 0.04 | | $ | 1.95 | | |
| | | | | | | | | | | | | | | | |
| ^(1)^ The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | ||||||||||||||
| ^(2)^ Represents income tax expense related to the revaluation of deferred tax assets as a result of a decrease in the corporate tax rate in a non-U.S. jurisdiction. | | ||||||||||||||
| ^(3)^ See description of non-GAAP financial measures. | |
All values are in US Dollars.
TE CONNECTIVITY PLC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended December 29, 2023
(UNAUDITED)
| | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Adjustments | | | | | |||||||
| | | | Acquisition- | | Restructuring | | | | | | ||||
| | | | Related | | and Other | | | | Adjusted | | ||||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | Tax Items^(2)^ | **** | (Non-GAAP) ^(3)^ | | ||||
| | | |||||||||||||
| Operating income: | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | — | | $ | 14 | | $ | 3 | | $ | 504 | |
| Industrial Solutions | | | | 8 | | | 7 | | | 1 | | | 227 | |
| Total | | | $ | 8 | | $ | 21 | | $ | 4 | | $ | 731 | |
| | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | 19.1 | % |
| | | | | | | | | | | | | | | |
| Income tax (expense) benefit | | | $ | (1) | | $ | (5) | | $ | (1,254) | | $ | (155) | |
| | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | 21.2 | % |
| | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 7 | | $ | 16 | | $ | (1,250) | | $ | 577 | |
| | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.02 | | $ | 0.05 | | $ | (3.99) | | $ | 1.84 | |
| | | | | | | | | | | | | | | |
| (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 874 million net income tax benefit associated with a ten-year tax credit obtained by a Swiss subsidiary and a 262 million income tax benefit related to the revaluation of deferred tax assets as a result of a corporate tax rate increase in Switzerland. Also includes a 118 million income tax benefit associated with the tax impacts of a legal entity restructuring with related costs of 4 million recorded in selling, general, and administrative expenses for other non-income taxes. | | |||||||||||||
| (3) See description of non-GAAP financial measures. | |
All values are in US Dollars.
TE CONNECTIVITY PLC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended March 29, 2024
(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 | | | $ | — | | $ | 19 | | $ | 496 | | |
| Industrial Solutions | | | | | 3 | | | 21 | | | 239 | |
| Total | | | $ | 3 | | $ | 40 | | $ | 735 | | |
| | | | | | | | | | | | | |
| Operating margin | | % | | | | | | | | | 18.5 | % |
| | | | | | | | | | | | | |
| Income tax expense | | | $ | (1) | | $ | (6) | | $ | (153) | | |
| | | | | | | | | | | | | |
| Effective tax rate | | % | | | | | | | | | 21.0 | % |
| | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 2 | | $ | 34 | | $ | 577 | | |
| | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.01 | | $ | 0.11 | | $ | 1.86 | | |
| | | | | | | | | | | | | |
| ^(1)^ The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | |||||||||||
| ^(2)^ See description of non-GAAP financial measures | |
All values are in US Dollars.
TE CONNECTIVITY PLC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Year Ended September 27, 2024
(UNAUDITED)
| | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Adjustments | | | | | |||||||
| | | | Acquisition- | | Restructuring | | | | | | ||||
| | | | Related | | and Other | | | | Adjusted | | ||||
| | | | Charges ^(1)^ | **** | Charges, Net^(1)^ | **** | Tax Items^(2)^ | **** | (Non-GAAP) ^(3)^ | | ||||
| | | |||||||||||||
| Operating income: | | | | | | | | | | | | | | |
| Transportation Solutions | | | $ | — | | $ | 67 | | $ | 3 | | $ | 1,950 | |
| Industrial Solutions | | | | 21 | | | 99 | | | 1 | | | 1,037 | |
| Total | | | $ | 21 | | $ | 166 | | $ | 4 | | $ | 2,987 | |
| | | | | | | | | | | | | | | |
| Operating margin | % | | | | | | | | | | | | 18.9 | % |
| | | | | | | | | | | | | | | |
| Income tax (expense) benefit | | | $ | (3) | | $ | (29) | | $ | (1,016) | | $ | (651) | |
| | | | | | | | | | | | | | | |
| Effective tax rate | % | | | | | | | | | | | | 21.8 | % |
| | | | | | | | | | | | | | | |
| Income from continuing operations | | | $ | 18 | | $ | 137 | | $ | (1,012) | | $ | 2,337 | |
| | | | | | | | | | | | | | | |
| Diluted earnings per share from continuing operations | | | $ | 0.06 | | $ | 0.44 | | $ | (3.28) | | $ | 7.56 | |
| | | | | | | | | | | | | | | |
| (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. | | |||||||||||||
| (2) Includes a 636 million net income tax benefit associated with a 972 million ten-year tax credit obtained by a Swiss subsidiary reduced by a 336 million valuation allowance related to the amount of the tax credit not expected to be realized. Also includes a 262 million income tax benefit related to the revaluation of deferred tax assets as a result of a corporate tax rate increase in Switzerland and a 118 million income tax benefit associated with the tax impacts of a legal entity restructuring with related costs of 4 million recorded in selling, general, and administrative expenses for other non-income taxes. | | |||||||||||||
| (3) See description of non-GAAP financial measures. | |
All values are in US Dollars.
TE CONNECTIVITY PLC
RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of January 22, 2025
(UNAUDITED)
| | | | |
|---|---|---|---|
| | Outlook for | | |
| | Quarter Ending | | |
| | March 28, | | |
| | 2025 | | |
| Diluted loss per share from continuing operations | $ | (0.05) | |
| Restructuring and other charges, net | | 0.13 | |
| Acquisition-related charges | | 0.01 | |
| Tax items | | 1.87 | |
| Adjusted diluted earnings per share from continuing operations ^(1)^ | $ | 1.96 | |
| | | | |
| | | | |
| Net sales growth (decline) | | (0.4) | % |
| Translation | | 2.8 | |
| (Acquisitions) divestitures, net | | (1.1) | |
| Organic net sales growth ^(1)^ | | 1.3 | % |
| | | | |
| ^(1)^ See description of non-GAAP financial measures. |
Exhibit 99.2
| EVERY CONNECTION COUNTS<br>TE Connectivity<br>First Quarter<br>2025 Earnings<br>January 22, 2025 |
|---|
| Forward-Looking Statements<br>This presentation contains certain "forward-looking statements" within the<br>meaning of the U.S. Private Securities Litigation Reform Act of 1995. These<br>statements are based on management's current expectations and are subject to<br>risks, uncertainty and changes in circumstances, which may cause actual<br>results, performance, financial condition or achievements to differ materially<br>from anticipated results, performance, financial condition or achievements. All<br>statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and<br>similar expressions are generally intended to identify forward-looking<br>statements. We have no intention and are under no obligation to update or alter<br>(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<br>otherwise, except to the extent required by law. The forward-looking statements<br>in this presentation include statements addressing our future financial condition<br>and operating results. Examples of factors that could cause actual results to<br>differ materially from those described in the forward-looking statements include,<br>among others, the extent, severity and duration of business interruption<br>negatively affecting our business operations; business, economic, competitive<br>and regulatory risks, such as conditions affecting demand for products in the<br>automotive and other industries we serve; competition and pricing pressure;<br>fluctuations in foreign currency exchange rates and commodity prices; natural<br>disasters and political, economic and military instability in countries in which we<br>operate, including continuing military conflict in certain parts of the world;<br>developments in the credit markets; future goodwill impairment; compliance with<br>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.<br>In addition, our change of incorporation from Switzerland to Ireland is subject to<br>risks, such as the risk that the anticipated advantages might not materialize, as<br>well as the risks that the price of our stock could decline and our position on<br>stock exchanges and indices could change, and Irish corporate governance and<br>regulatory schemes could prove different or more challenging than currently<br>expected. More detailed information about these and other factors is set forth in<br>TE Connectivity plc's Annual Report on Form 10-K for the fiscal year ended<br>Sept. 27, 2024 as well as in our Quarterly Reports on Form 10-Q, Current<br>Reports on Form 8-K and other reports filed by us with the U.S. Securities and<br>Exchange Commission.<br>Non-GAAP Financial Measures<br>Where we have used non-GAAP financial measures, reconciliations to the most<br>comparable GAAP measure are provided, along with a disclosure on the<br>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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| Record Adjusted Operating Margins; Q1 EPS Above Guidance Driven by Strong Operational Performance<br>▪ Sales of $3.84B, flat year-over-year<br>▪ Organic sales as expected. Reported sales unfavorably impacted by increased currency exchange headwinds in the quarter<br>▪ Orders of $4.0B, up Y/Y and sequentially, primarily driven by momentum in Artificial Intelligence programs<br>▪ Adjusted Operating Margins of 19.4%, up 30bps Y/Y<br>▪ Adjusted EPS above guidance at $1.95, up 6% Y/Y on flat sales<br>▪ Record Q1 Free Cash Flow generation of $674M, up 18% Y/Y<br>▪ ~$500M returned to shareholders and $325M used for bolt-on acquisitions in the Industrial segment<br>▪ TE named to the Dow Jones Sustainability Index for the 13th consecutive year<br>Earnings Highlights<br>3 Organic Net Sales Growth (Decline), Adjusted Operating Margin, Adjusted EPS, and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations<br>Q2 Guidance<br>▪ Expect Sales of ~$3.95B with Adjusted EPS of ~$1.96, up 5% Y/Y<br>▪ FX unfavorably impacting sales by ~$110M Y/Y; FX and tax headwinds impacting EPS by $0.06 Y/Y<br>▪ Expect sequential organic growth in both the Transportation & Industrial segments |
| --- |
| Reported FY24<br>Q1<br>FY24<br>Q4<br>FY25<br>Q1<br>Q1 Growth<br>Y/Y Q/Q<br>Transportation 2,268 2,224 2,151 (5)% (3)%<br>Industrial 1,505 1,617 1,860 24% 15%<br>Total TE 3,773 3,841 4,011 6% 4%<br>Book to Bill 0.98 0.94 1.05<br>Segment Orders Summary<br>($ in millions)<br>4<br>▪ Transportation orders as expected, reflecting<br>ongoing softness in commercial transportation<br>and sensors end markets<br>▪ Industrial segment orders reflect a book to bill<br>over 1.0 in all businesses; ongoing momentum in<br>artificial intelligence, AD&M, and energy<br>applications<br>Order patterns supporting growth outlook |
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| Transportation Solutions<br>Q1 SALES<br>Reported<br>Down 6%<br>Organic<br>Down 5%<br>Q1 ADJUSTED OPERATING MARGIN<br>Continued strong<br>operational execution<br>in a dynamic market<br>environment<br>Adjusted EBITDA Margin 26.0% 26.3%<br>5<br>$2,393 $2,243<br>Q1 2024 Q1 2025<br>Q1 BUSINESS PERFORMANCE<br>Y/Y Growth Rates Reported Organic<br>Automotive $1,722 (4)% (3)%<br>Commercial<br>Transportation 312 (12)% (12)%<br>Sensors 209 (13)% (13)%<br>Transportation<br>Solutions $2,243 (6)% (5)%<br>$ in Millions<br>21.1% 21.3%<br>Q1 2024 Q1 2025<br>▪ Automotive<br>Organic growth in Asia<br>offset by softness in<br>Europe & North America<br>▪ Commercial Transportation<br>Organic decline driven by<br>weakness in Europe & North<br>America<br>▪ Sensors<br>Sales reduction driven by<br>weakness in broader industrial<br>end markets in Europe and North<br>America<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>Strong margin performance;<br>expect sequential organic sales growth in<br>Q2 despite lower auto production |
| --- |
| Industrial Solutions<br>Q1 SALES<br>Reported<br>Up 11%<br>Organic<br>Up 9%<br>Q1 ADJUSTED OPERATING MARGIN<br>Margin expansion of<br>100bps driven by higher<br>volume and strong<br>operational performance<br>Adjusted EBITDA Margin 21.0% 21.4%<br>6<br>Q1 BUSINESS PERFORMANCE<br>Y/Y Growth<br>Rates Reported Organic<br>Digital Data<br>Networks (DDN) $413 48% 48%<br>Automation<br>& Connected<br>Living (ACL)<br>479 3% (5)%<br>Aerospace,<br>Defense and<br>Marine (AD&M)<br>334 15% 15%<br>Energy 216 5% 7%<br>Medical 151 (25)% (25)%<br>Industrial<br>Solutions $1,593 11% 9%<br>$ in Millions<br>▪ Digital Data Networks<br>Strong growth driven by<br>momentum in AI applications<br>across multiple customers<br>▪ Automation & Connected Living<br>Organic decline driven by<br>continued market weakness in<br>factory automation, partially offset<br>by growth in appliance markets<br>▪ AD&M<br>Organic growth reflects<br>ongoing market improvement<br>in commercial aerospace<br>and defense<br>▪ Energy<br>Organic growth in all regions with<br>continued strong momentum across<br>energy applications<br>▪ Medical<br>Declines resulting from inventory<br>normalization by our customers<br>$1,438 $1,593<br>Q1 2024 Q1 2025<br>15.8%<br>16.8%<br>Q1 2024 Q1 2025<br>Expect sequential organic sales growth in<br>Q2 in all businesses<br>Organic Net Sales Growth (Decline), Adjusted Operating Margin, and Adjusted EBITDA Margin are non-GAAP financial measures; see Appendix for descriptions and reconciliations. |
| --- |
| Q1 Financial Summary<br>7<br>($ in Millions, except per share amounts) Q1 FY24 Q1 FY25<br>Net Sales $ 3,831 $ 3,836<br>Operating Income $ 698 $ 690<br>Operating Margin 18.2% 18.0%<br>Acquisition-Related Charges 8 5<br>Restructuring & Other Charges, Net 25 50<br>Adjusted Operating Income $ 731 $ 745<br>Adjusted Operating Margin 19.1% 19.4%<br>Earnings Per Share* $ 5.76 $ 1.75<br>Acquisition-Related Charges 0.02 0.01<br>Restructuring & Other Charges, Net 0.05 0.14<br>Tax Items (3.99) 0.04<br>Adjusted EPS $ 1.84 $ 1.95<br>Adjusted Effective Tax Rate 21.2% 23.0%<br>*Represents Diluted Earnings Per Share from Continuing Operations<br>Adjusted Operating Income, Adjusted Operating Margin, Adjusted Earnings Per Share, and Adjusted Effective Tax Rate are non-GAAP financial measures; see Appendix for descriptions and reconciliations. |
| --- |
| Q1 Financial Performance<br>8<br>19.1%<br>19.4%<br>Q1 2024 Q1 2025<br>SALES ADJUSTED OPERATING MARGIN<br>ADJUSTED EPS FREE CASH FLOW<br>Margin Expansion and EPS Growth Driven by Strong Operational Performance<br>Record Q1 Free Cash Flow<br>$ in Billions<br>$ in Millions<br>Up 18%<br>Y/Y<br>$570<br>$674<br>Q1 2024 Q1 2025<br>Up 6% Y/Y<br>$3.8 $3.8<br>Q1 2024 Q1 2025<br>30bps of<br>margin<br>expansion<br>Adjusted Operating Margin, Adjusted Earnings Per Share, and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations.<br>Organic sales<br>flat Y/Y<br>$1.84 $1.95<br>Q1 2024 Q1 2025 |
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| EVERY CONNECTION COUNTS<br>Additional Information |
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| Y/Y Q1 2025<br>10<br>Sales<br>(in millions)<br>Adjusted EPS<br>Q1 2024 Results $3,831 $1.84<br>Operational Performance 23 0.12<br>FX Impact (18) 0.03<br>Tax Rate Impact - (0.04)<br>Q1 2025 Results $3,836 $1.95<br>Adjusted Earnings Per Share is a non-GAAP financial measure; see Appendix for description and reconciliation. |
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| Y/Y Q2 2025<br>11<br>Sales<br>(in millions)<br>Adjusted EPS<br>Q2 2024 Results $3,967 $1.86<br>Operational Performance 95 0.16<br>FX Impact (112) (0.01)<br>Tax Rate Impact - (0.05)<br>Q2 2025 Guidance $3,950 $1.96<br>Adjusted Earnings Per Share is a non-GAAP financial measure; see Appendix for description and reconciliation. |
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| Q1 Balance Sheet and Cash Flow Summary<br>12<br>($ in Millions) Q1 2024 Q1 2025<br>Beginning Cash Balance $1,661 $1,319<br>Free Cash Flow 570 674<br>Dividends (183) (189)<br>Share repurchases (476) (303)<br>Net increase (decrease) in debt (70) 90<br>Acquisition of businesses, net of cash<br>acquired (349) (325)<br>Other 17 (12)<br>Ending Cash Balance $1,170 $1,254<br>Total Debt $4,198 $4,205<br>A/R $2,828 $2,912<br>Days Sales Outstanding* 67 68<br>Inventory $2,783 $2,619<br>Days on Hand* 96 93<br>Accounts Payable $1,690 $1,859<br>Days Outstanding* 61 68<br>Free Cash Flow and Working Capital Liquidity, Cash and Debt<br>($ in Millions) Q1 2024 Q1 2025<br>Cash from Operating Activities $719 $878<br>Capital expenditures, net (149) (204)<br>Free Cash Flow $570 $674<br>Free Cash Flow is a non-GAAP financial measure, see Appendix for description and reconciliation<br>* Calculated on a quarterly basis and adjusted to exclude the impact of acquisitions and divestitures |
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| EVERY CONNECTION COUNTS<br>Appendix |
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| We present non-GAAP performance and liquidity measures as<br>we believe it is appropriate for investors to consider adjusted<br>financial measures in addition to results in accordance with<br>accounting principles generally accepted in the U.S. (“GAAP”).<br>These non-GAAP financial measures provide supplemental<br>information and should not be considered replacements for<br>results in accordance with GAAP. Management uses non-GAAP<br>financial measures internally for planning and forecasting<br>purposes and in its decision-making processes related to the<br>operations of our company. We believe these measures provide<br>meaningful information to us and investors because they<br>enhance the understanding of our operating performance, ability<br>to generate cash, and the trends of our business. Additionally,<br>we believe that investors benefit from having access to the same<br>financial measures that management uses in evaluating our<br>operations. The primary limitation of these measures is that they<br>exclude the financial impact of items that would otherwise either<br>increase or decrease our reported results. This limitation is best<br>addressed by using these non-GAAP financial measures in<br>combination with the most directly comparable GAAP financial<br>measures in order to better understand the amounts, character,<br>and impact of any increase or decrease in reported amounts.<br>These non-GAAP financial measures may not be comparable to<br>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<br>growth (decline) (the most comparable GAAP financial<br>measure) excluding the impact of foreign currency exchange<br>rates, and acquisitions and divestitures that occurred in the<br>preceding twelve months, if any. Organic Net Sales Growth<br>(Decline) is a useful measure of our performance because it<br>excludes items that are not completely under management’s<br>control, such as the impact of changes in foreign currency<br>exchange rates, and items that do not reflect the underlying<br>growth of the company, such as acquisition and divestiture<br>activity. This measure is a significant component in our<br>incentive compensation plans.<br>▪ Adjusted Operating Income and Adjusted Operating<br>Margin – represent operating income and operating margin,<br>respectively, (the most comparable GAAP financial<br>measures) before special items including restructuring and<br>other charges, acquisition-related charges, impairment of<br>goodwill, and other income or charges, if any. We utilize<br>these adjusted measures in combination with operating<br>income and operating margin to assess segment level<br>operating performance and to provide insight to management<br>in evaluating segment operating plan execution and market<br>conditions. Adjusted Operating Income is a significant<br>component in our incentive compensation plans.<br>▪ Adjusted Income Tax (Expense) Benefit and Adjusted<br>Effective Tax Rate – represent income tax (expense) benefit<br>and effective tax rate, respectively, (the most comparable<br>GAAP financial measures) after adjusting for the tax effect of<br>special items including restructuring and other charges,<br>acquisition-related charges, impairment of goodwill, other<br>income or charges, and certain significant tax items, if any.<br>▪ Adjusted Income from Continuing Operations –<br>represents income from continuing operations (the most<br>comparable GAAP financial measure) before special items<br>including restructuring and other charges, acquisition-related<br>charges, impairment of goodwill, other income or charges,<br>and certain significant tax items, if any, and, if applicable, the<br>related tax effects.<br>Non-GAAP Financial Measures<br>14 |
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| ▪ Adjusted Earnings Per Share – represents diluted earnings<br>(loss) per share from continuing operations (the most<br>comparable GAAP financial measure) before special items<br>including restructuring and other charges, acquisition-related<br>charges, impairment of goodwill, other income or charges,<br>and certain significant tax items, if any, and, if applicable, the<br>related tax effects. This measure is a significant component in<br>our incentive compensation plans.<br>▪ Adjusted EBITDA and Adjusted EBITDA Margin –<br>represent net income and net income as a percentage of net<br>sales, respectively, (the most comparable GAAP financial<br>measures) before interest expense, interest income, income<br>taxes, depreciation, and amortization, as adjusted for net<br>other income (expense), income (loss) from discontinued<br>operations, and special items including restructuring and<br>other charges, acquisition-related charges, impairment of<br>goodwill, and other income or charges, if any.<br>▪ Free Cash Flow (FCF) – is a useful measure of our ability to<br>generate cash. The difference between net cash provided by<br>operating activities (the most comparable GAAP financial<br>measure) and Free Cash Flow consists mainly of significant<br>cash outflows and inflows that we believe are useful to<br>identify. We believe Free Cash Flow provides useful<br>information to investors as it provides insight into the primary<br>cash flow metric used by management to monitor and<br>evaluate cash flows generated from our operations. Free<br>Cash Flow is defined as net cash provided by operating<br>activities excluding voluntary pension contributions and the<br>cash impact of special items, if any, minus net capital<br>expenditures. Voluntary pension contributions are excluded<br>from the GAAP financial measure because this activity is<br>driven by economic financing decisions rather than operating<br>activity. Certain special items, including cash paid (collected)<br>pursuant to collateral requirements related to cross-currency<br>swap contracts, are also excluded by management in<br>evaluating Free Cash Flow. Net capital expenditures consist<br>of capital expenditures less proceeds from the sale of<br>property, plant, and equipment. These items are subtracted<br>because they represent long-term commitments. In the<br>calculation of Free Cash Flow, we subtract certain cash items<br>that are ultimately within management’s and the Board of<br>Directors’ discretion to direct and may imply that there is less<br>or more cash available for our programs than the most<br>comparable GAAP financial measure indicates. It should not<br>be inferred that the entire Free Cash Flow amount is available<br>for future discretionary expenditures, as our definition of Free<br>Cash Flow does not consider certain non-discretionary<br>expenditures, such as debt payments. In addition, we may<br>have other discretionary expenditures, such as discretionary<br>dividends, share repurchases, and business acquisitions, that<br>are not considered in the calculation of Free Cash Flow.<br>Non-GAAP Financial Measures (cont.)<br>15 |
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| Segment Summary<br>16<br><br><br>Transportation Solutions $ 2,243 $ 2,393<br>Industrial Solutions 1,593 1,438<br>Total $ 3,836 $ 3,831<br>O perating O perating<br>Margin Margin<br>Transportation Solutions $ 446 19.9 % $ 487 20.4 %<br>Industrial Solutions 244 15.3 211 14.7<br>Total $ 690 18.0 % $ 698 18.2 %<br>Adjusted Adjusted<br>O perating O perating<br>Margin (1) Margin (1)<br>Transportation Solutions $ 478 21.3 % $ 504 21.1 %<br>Industrial Solutions 267 16.8 227 15.8<br>Total $ 745 19.4 % $ 731 19.1 %<br>For the Q uarters Ended<br>December 27, December 29,<br>O perating<br>Income<br>Adjusted<br>O perating<br>Income (1)<br>Income<br>O perating<br>(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures.<br>2024 2023<br>($ in millions)<br>Adjusted<br>O perating<br>Net Sales Net Sales<br>Income (1) |
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| Reconciliation of Net Sales Growth<br>17<br><br>Transportation Solutions (3)<br>:<br>Automotive $ (74) (4.1) % $ (55) (3.0) % $ (7) $ (12)<br>Commercial transportation (44) (12.4) (41) (11.6) (3) —<br>Sensors (32) (13.3) (30) (12.6) (2) —<br>Total Transportation Solutions (150) (6.3) (126) (5.2) (12) (12)<br>Industrial Solutions (3):<br>Automation and connected living 15 3.2 (21) (4.5) (2) 38<br>Aerospace, defense, and marine 44 15.2 45 15.4 (1) —<br>Digital data networks 134 48.0 134 48.0 — —<br>Energy 11 5.4 14 6.8 (3) —<br>Medical (49) (24.5) (49) (24.5) — —<br>Total Industrial Solutions 155 10.8 123 8.6 (6) 38<br>Total $ 5 0.1 % $ (3) — % $ (18) $ 26<br>(1) Organic net sales growth (decline) is a non-GAAP financial measure. See description of non-GAAP financial measures.<br>(2) Represents the change in net sales resulting from changes in foreign currency exchange rates.<br>(3) Industry end market information is presented consistently with our internal management reporting and may be periodically revised as management<br>deems necessary.<br>Net Sales<br>Growth (Decline)<br>O rganic Net Sales<br>Growth (Decline) (1)<br>Change in Net Sales for the Q uarter Ended December 27, 2024<br>versus Net Sales for the Q uarter Ended December 29, 2023<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 December 27, 2024<br>18<br><br>Operating income:<br>Transportation Solutions $ 446 $ — $ 32 $ — $ 478<br>Industrial Solutions 244 5 18 — 267<br>Total $ 690 $ 5 $ 50 $ — $ 745<br>Operating margin 18.0 % 19.4 %<br>Income tax expense $ (178) $ (1) $ (9) $ 13 $ (175)<br>Effective tax rate 25.2 % 23.0 %<br>Income from continuing operations $ 528 $ 4 $ 41 $ 13 $ 586<br>Diluted earnings per share from<br>continuing operations $ 1.75 $ 0.01 $ 0.14 $ 0.04 $ 1.95<br><br>(3) See description of non-GAAP financial measures.<br>(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax<br>laws in effect for each such jurisdiction.<br>U.S. GAAP Charges (1) (Non-GAAP) (3) Charges, Net (1)<br>($ in millions, except per share data)<br>Tax Items (2)<br>(2) Represents income tax expense related to the revaluation of deferred tax assets as a result of a decrease in the corporate tax rate in a non-U.S. jurisdiction.<br>Adjustments<br>Related and O ther Adjusted<br>Acquisition- Restructuring |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended December 29, 2023<br>19<br><br>Operating income:<br>Transportation Solutions $ 487 $ — $ 14 $ 3 $ 504<br>Industrial Solutions 211 8 7 1 227<br>Total $ 698 $ 8 $ 21 $ 4 $ 731<br>Operating margin 18.2 % 19.1 %<br>Income tax (expense) benefit $ 1,105 $ (1) $ (5) $ (1,254) $ (155)<br>Effective tax rate (158.1) % 21.2 %<br>Income from continuing operations $ 1,804 $ 7 $ 16 $ (1,250) $ 577<br>Diluted earnings per share from<br>continuing operations $ 5.76 $ 0.02 $ 0.05 $ (3.99) $ 1.84<br><br>(2) Includes an $874 million net income tax benefit associated with a ten-year tax credit obtained by a Swiss subsidiary and a $262 million<br>income tax benefit related to the revaluation of deferred tax assets as a result of a corporate tax rate increase in Switzerland. Also includes a<br>$118 million income tax benefit associated with the tax impacts of a legal entity restructuring with related costs of $4 million recorded in<br>selling, general, and administrative expenses for other non-income taxes.<br>(3) See description of non-GAAP financial measures.<br>Adjustments<br>Related and O ther Adjusted<br>Acquisition- Restructuring<br>($ in millions, except per share data)<br>(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax<br>laws in effect for each such jurisdiction.<br>U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (3) Tax Items (2) |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Quarter Ended March 29, 2024<br>20<br><br>Operating income:<br>Transportation Solutions $ 477 $ — $ 19 $ 496<br>Industrial Solutions 215 3 21 239<br>Total $ 692 $ 3 $ 40 $ 735<br>Operating margin 17.4 % 18.5 %<br>Income tax expense $ (146) $ (1) $ (6) $ (153)<br>Effective tax rate 21.3 % 21.0 %<br>Income from continuing operations $ 541 $ 2 $ 34 $ 577<br>Diluted earnings per share from continuing operations $ 1.75 $ 0.01 $ 0.11 $ 1.86<br><br>Acquisition- Restructuring<br>Adjustments<br>($ in millions, except per share data)<br>(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax<br>laws in effect for each such jurisdiction.<br>Related and O ther Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (2)<br>(2) See description of non-GAAP financial measures |
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| Reconciliation of Non-GAAP Financial Measures to GAAP<br>Financial Measures for the Year Ended September 27, 2024<br>21<br><br>Operating income:<br>Transportation Solutions $ 1,880 $ — $ 67 $ 3 $ 1,950<br>Industrial Solutions 916 21 99 1 1,037<br>Total $ 2,796 $ 21 $ 166 $ 4 $ 2,987<br>Operating margin 17.6 % 18.9 %<br>Income tax (expense) benefit $ 397 $ (3) $ (29) $ (1,016) $ (651)<br>Effective tax rate (14.2) % 21.8 %<br>Income from continuing operations $ 3,194 $ 18 $ 137 $ (1,012) $ 2,337<br>Diluted earnings per share from<br>continuing operations $ 10.34 $ 0.06 $ 0.44 $ (3.28) $ 7.56<br>Acquisition- Restructuring<br>Adjustments<br>(3) See description of non-GAAP financial measures.<br>($ in millions, except per share data)<br>Related and O ther Adjusted<br>U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (3) Tax Items (2)<br>(2) Includes a $636 million net income tax benefit associated with a $972 million ten-year tax credit obtained by a Swiss subsidiary reduced by<br>a $336 million valuation allowance related to the amount of the tax credit not expected to be realized. Also includes a $262 million income tax<br>benefit related to the revaluation of deferred tax assets as a result of a corporate tax rate increase in Switzerland and a $118 million income tax<br>benefit associated with the tax impacts of a legal entity restructuring with related costs of $4 million recorded in selling, general, and<br>administrative expenses for other non-income taxes.<br>(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax<br>laws in effect for each such jurisdiction. |
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| Reconciliation of Adjusted EBITDA<br>and Adjusted EBITDA Margin<br>22<br>Net income $ 528 $ 1,803<br>Loss from discontinued operations — 1<br>Income tax expense (benefit) 178 (1,105)<br>Other expense, net 1 3<br>Interest expense 6 18<br>Interest income (23) (22)<br>Operating income 690 698<br>Acquisition-related charges 5 8<br>Restructuring and other charges, net 50 21<br>Taxes (non-income tax) recorded in SG&A — 4<br>Adjusted operating income (1)<br> 745 731<br>Depreciation and amortization 186 194<br>Adjusted EBITDA (1) $ 931 $ 925<br>Net sales $ 3,836 $ 3,831<br>Net income as a percentage of net sales 13.8 % 47.1 %<br>Adjusted EBITDA margin (1)<br> 24.3 % 24.1 %<br>Operating income $ 446 $ 244 $ 690 $ 487 $ 211 $ 698<br>Acquisition-related charges — 5 5 — 8 8<br>Restructuring and other charges, net 32 18 50 14 7 21<br>Taxes (non-income tax) recorded in SG&A — — — 3 1 4<br>Adjusted operating income (1)<br> 478 267 745 504 227 731<br>Depreciation and amortization 112 74 186 119 75 194<br>Adjusted EBITDA (1) $ 590 $ 341 $ 931 $ 623 $ 302 $ 925<br>Net sales $ 2,243 $ 1,593 $ 3,836 $ 2,393 $ 1,438 $ 3,831<br>Operating margin 19.9 % 15.3 % 18.0 % 20.4 % 14.7 % 18.2 %<br>Adjusted operating margin (1)<br> 21.3 % 16.8 % 19.4 % 21.1 % 15.8 % 19.1 %<br>Adjusted EBITDA margin (1)<br> 26.3 % 21.4 % 24.3 % 26.0 % 21.0 % 24.1 %<br>(1) See description of non-GAAP financial measures.<br>($ in millions)<br>December 27, 2024 December 29, 2023<br>Transportation Industrial<br>For the Q uarters Ended<br>December 27,<br>2024<br>December 29,<br>2023<br>For the Q uarters Ended<br>($ in millions)<br>Transportation Industrial<br>Solutions Solutions Total Solutions Solutions Total |
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| Reconciliation of Free Cash Flow<br>23<br>Net cash provided by operating activities $ 878 $ 719<br>Net cash used in investing activities (537) (468)<br>Net cash used in financing activities (395) (745)<br>Effect of currency translation on cash (11) 3<br>Net decrease in cash, cash equivalents, and restricted cash $ (65) $ (491)<br>Net cash provided by operating activities $ 878 $ 719<br>Capital expenditures, net (204) (149)<br>Free cash flow (1) $ 674 $ 570<br>For the Q uarters Ended<br>December 27, December 29,<br>(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.<br>2024 2023<br>(in millions) |
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| Reconciliation of Forward-Looking Non-GAAP Financial<br>Measures to Forward-Looking GAAP Financial Measures<br>24<br>Diluted loss per share from continuing operations $ (0.05)<br>Restructuring and other charges, net 0.13<br>Acquisition-related charges 0.01<br>Tax items 1.87<br>Adjusted diluted earnings per share from continuing operations (2) $ 1.96<br>Net sales growth (decline) (0.4) %<br>Translation 2.8<br>(Acquisitions) divestitures, net (1.1)<br>Organic net sales growth (2)<br> 1.3 %<br>Effective tax rate 102.2 % 42.9 %<br>Effective tax rate adjustments (3)<br> (79.2) (19.2)<br>Adjusted effective tax rate (2)<br> 23.0 % 23.7 %<br>Q uarter Ending<br>O utlook for<br>2025 (1)<br>March 28, O utlook for<br>Fiscal 2025 (1)<br>(3) Includes adjustments for special tax items and the tax effect of acquisition-related charges and net restructuring and other charges, calculated based<br>on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.<br>(1) Outlook is as of January 22, 2025.<br>(2) See description of non-GAAP financial measures. |
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