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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): November 1, 2023
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 November 1, 2023, TE Connectivity Ltd. (the “Company”) issued a press release reporting the Company’s fourth quarter and full year results for fiscal 2023. 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 November 1, 2023 (see information in the press release attached hereto as Exhibit 99.1 under “Conference Call and Webcast”). A copy of the slide materials to be discussed at the conference call and webcast is being furnished pursuant to Regulation FD as Exhibit 99.2 and is incorporated herein by reference, and the slide materials also can be accessed at the “Investors” section of the Company’s website (www.te.com).
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit |
|
Description |
|
|
|
99.1 |
|
|
|
|
|
99.2 |
|
Presentation - TE Connectivity Q4 2023 Earnings Call (November 1, 2023) |
|
|
|
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.
Exhibit 99.1
NEWS RELEASE
te.com
TE Connectivity announces fourth quarter and full year results for fiscal year 2023
Q4 earnings per share exceed guidance;
Full year results reflect strong margin and EPS expansion from first half to second half;
Record cash generated for the quarter and the full year
SCHAFFHAUSEN, Switzerland – Nov. 1, 2023 – TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter and year ended Sept. 29, 2023.
Fourth Quarter Highlights
| ● | Net sales were $4 billion, essentially flat on a reported basis and down 2% organically, when comparing both to a 13-week fourth quarter in fiscal year 2022. |
| ● | GAAP diluted earnings per share (EPS) from continuing operations were $1.75, down 21% year over year. |
| ● | Adjusted EPS were $1.78, an increase of 2% versus the prior year on a 13-week comparison basis. |
| ● | Orders were $3.9 billion, with sequential growth in the Transportation and Communications segments. |
| ● | Cash flow from operating activities was $1.1 billion and free cash flow was $945 million, both quarterly records, as the company continues to demonstrate its strong cash generation model. |
Full Year Highlights
| ● | Net sales were $16 billion, essentially flat on a reported basis despite currency exchange headwinds of $430 million, and up 3% organically, with growth in the Transportation and Industrial segments, when comparing both to a 52-week prior year. |
| ● | GAAP EPS from continuing operations were $6.01, down 20% year over year. |
| ● | Adjusted EPS were $6.74, down 6% versus the prior year on a 52-week comparison basis. |
| ● | Strong margin and EPS expansion in the second half compared to the first half of the year, driven by strong operational performance. |
| ● | Cash flow from operating activities was $3.1 billion and free cash flow was $2.4 billion, both company records, with approximately $1.7 billion returned to shareholders. |
“I’m pleased with our strong finish to fiscal 2023, as we delivered earnings above guidance for the quarter along with record cash flow that resulted in over 100% free cash flow conversion,” said TE Connectivity CEO Terrence Curtin. “For the full year, our teams delivered year-over-year organic sales growth in our Transportation and Industrial segments, as the strength and diversity of our portfolio allowed us to overcome cyclicality in some of our end markets and headwinds from currency exchange. In Transportation, we continued to capitalize on our leading global position in electric vehicles to drive sales growth and, importantly, expand margins in the second half. Our Industrial segment demonstrated continued growth momentum in renewable energy applications and benefited from ongoing recovery in the commercial air and medical markets. While our Communications segment declined in 2023 as expected, we are seeing positive momentum from artificial intelligence applications where our high-speed connectivity solutions and engineering expertise have resulted in key design wins with technology leaders.
“As we look to the year ahead, while we remain in a dynamic market environment, we are confident in our ability to drive profitable growth leveraging key trends including e-mobility, renewable energy and artificial intelligence, where our advanced technology and close customer partnerships are helping to create a safer, sustainable, productive and connected future.”
First Quarter FY24 Outlook
For the first quarter of fiscal 2024, the company expects net sales of approximately $3.85 billion, flat on both a reported and organic basis year over year. GAAP EPS from continuing operations are expected to be approximately $1.59, up 27% year over year, with adjusted EPS of approximately $1.70, up more than 10% year over year, with strong margin expansion.
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 (888) 330-3417 and for international callers, the dial-in number is (646) 960-0804. |
| ● | A replay of the conference call will be available on TE Connectivity’s investor website at investors.te.com at 11:30 a.m. ET on Nov. 1, 2023. |
About TE Connectivity
TE Connectivity Ltd. (NYSE: TEL) is a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of connectivity and sensor solutions, proven in the harshest environments, enable advancements in transportation, industrial applications, medical technology, energy, data communications, and the home. With more than 85,000 employees, including over 8,000 engineers, working alongside customers in approximately 140 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedIn, Facebook, WeChat and Twitter.
Non-GAAP Financial Measures
We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures provide supplemental information and should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe that investors benefit from having access to the same financial measures that management uses in evaluating our operations. The primary limitation of these measures is that they exclude the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies.
The following provides additional information regarding our non-GAAP financial measures:
•Organic Net Sales Growth (Decline) – represents net sales growth (decline) (the most comparable GAAP financial measure) excluding the impact of foreign currency exchange rates, and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic Net Sales Growth (Decline) is a useful measure of our performance because it excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition and divestiture activity.
This measure is a significant component in our incentive compensation plans.
•Adjusted Operating Income 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 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 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, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects.
•Adjusted Earnings Per Share – represents diluted earnings per share from continuing operations (the most comparable GAAP 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.
•Net Sales Excluding the Impact of the Additional Week, Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Organic Net Sales Growth (Decline) Excluding the Impact of the Additional Week, and Adjusted Earnings Per Share Excluding the Impact of the Additional Week – represent certain GAAP and non-GAAP financial measures excluding the impact of the additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length.
•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 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.
•Free Cash Flow Conversion – represents the ratio of Free Cash Flow to Adjusted Income from Continuing Operations. We use Free Cash Flow Conversion as an indicator of our ability to convert earnings to cash.
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, such as the coronavirus disease 2019 (“COVID-19”) negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate, including continuing military conflict between Russia and Ukraine resulting from Russia’s invasion of Ukraine or escalating tensions in surrounding countries; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the effects of Swiss tax reform. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. 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 30, 2022, as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.
Contacts: |
Media Relations: Rachel Quimby TE Connectivity 610-893-9593 Rachel.Quimby@te.com |
Investor Relations: Sujal Shah TE Connectivity 610-893-9790 Sujal.Shah@te.com |
# # #
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
For the Quarters Ended |
|
For the Years Ended |
||||||||
|
September 29, |
|
September 30, |
|
September 29, |
|
September 30, |
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
|
(in millions, except per share data) |
||||||||||
Net sales |
$ |
4,035 |
|
$ |
4,359 |
|
$ |
16,034 |
|
$ |
16,281 |
Cost of sales |
|
2,750 |
|
|
3,010 |
|
|
10,979 |
|
|
11,037 |
Gross margin |
|
1,285 |
|
|
1,349 |
|
|
5,055 |
|
|
5,244 |
Selling, general, and administrative expenses |
|
412 |
|
|
412 |
|
|
1,670 |
|
|
1,584 |
Research, development, and engineering expenses |
|
174 |
|
|
179 |
|
|
708 |
|
|
718 |
Acquisition and integration costs |
|
7 |
|
|
16 |
|
|
33 |
|
|
45 |
Restructuring and other charges, net |
|
57 |
|
|
82 |
|
|
340 |
|
|
141 |
Operating income |
|
635 |
|
|
660 |
|
|
2,304 |
|
|
2,756 |
Interest income |
|
21 |
|
|
6 |
|
|
60 |
|
|
15 |
Interest expense |
|
(19) |
|
|
(18) |
|
|
(80) |
|
|
(66) |
Other income (expense), net |
|
(3) |
|
|
4 |
|
|
(16) |
|
|
28 |
Income from continuing operations before income taxes |
|
634 |
|
|
652 |
|
|
2,268 |
|
|
2,733 |
Income tax (expense) benefit |
|
(81) |
|
|
56 |
|
|
(364) |
|
|
(306) |
Income from continuing operations |
|
553 |
|
|
708 |
|
|
1,904 |
|
|
2,427 |
Income (loss) from discontinued operations, net of income taxes |
|
(1) |
|
|
— |
|
|
6 |
|
|
1 |
Net income |
$ |
552 |
|
$ |
708 |
|
$ |
1,910 |
|
$ |
2,428 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
1.77 |
|
$ |
2.22 |
|
$ |
6.04 |
|
$ |
7.51 |
Income (loss) from discontinued operations |
|
— |
|
|
— |
|
|
0.02 |
|
|
— |
Net income |
|
1.76 |
|
|
2.22 |
|
|
6.06 |
|
|
7.52 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
1.75 |
|
$ |
2.21 |
|
$ |
6.01 |
|
$ |
7.47 |
Income (loss) from discontinued operations |
|
— |
|
|
— |
|
|
0.02 |
|
|
— |
Net income |
|
1.75 |
|
|
2.21 |
|
|
6.03 |
|
|
7.47 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
313 |
|
|
319 |
|
|
315 |
|
|
323 |
Diluted |
|
316 |
|
|
321 |
|
|
317 |
|
|
325 |
TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
September 29, |
|
September 30, |
||
|
2023 |
|
2022 |
||
|
(in millions, except share data) |
||||
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
1,661 |
|
$ |
1,088 |
Accounts receivable, net of allowance for doubtful accounts of $30 and $45, respectively |
|
2,967 |
|
|
2,865 |
Inventories |
|
2,552 |
|
|
2,676 |
Prepaid expenses and other current assets |
|
712 |
|
|
639 |
Total current assets |
|
7,892 |
|
|
7,268 |
Property, plant, and equipment, net |
|
3,754 |
|
|
3,567 |
Goodwill |
|
5,463 |
|
|
5,258 |
Intangible assets, net |
|
1,175 |
|
|
1,288 |
Deferred income taxes |
|
2,600 |
|
|
2,498 |
Other assets |
|
828 |
|
|
903 |
Total assets |
$ |
21,712 |
|
$ |
20,782 |
Liabilities, redeemable noncontrolling interests, and shareholders' equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Short-term debt |
$ |
682 |
|
$ |
914 |
Accounts payable |
|
1,563 |
|
|
1,593 |
Accrued and other current liabilities |
|
2,218 |
|
|
2,125 |
Total current liabilities |
|
4,463 |
|
|
4,632 |
Long-term debt |
|
3,529 |
|
|
3,292 |
Long-term pension and postretirement liabilities |
|
728 |
|
|
695 |
Deferred income taxes |
|
185 |
|
|
244 |
Income taxes |
|
365 |
|
|
304 |
Other liabilities |
|
787 |
|
|
718 |
Total liabilities |
|
10,057 |
|
|
9,885 |
Commitments and contingencies |
|
|
|
|
|
Redeemable noncontrolling interests |
|
104 |
|
|
95 |
Shareholders' equity: |
|
|
|
|
|
Common shares, CHF 0.57 par value, 322,470,281 shares authorized and issued, and 330,830,781 shares authorized and issued, respectively |
|
142 |
|
|
146 |
Accumulated earnings |
|
12,947 |
|
|
12,832 |
Treasury shares, at cost, 10,487,742 and 12,749,540 shares, respectively |
|
(1,380) |
|
|
(1,681) |
Accumulated other comprehensive loss |
|
(158) |
|
|
(495) |
Total shareholders' equity |
|
11,551 |
|
|
10,802 |
Total liabilities, redeemable noncontrolling interests, and shareholders' equity |
$ |
21,712 |
|
$ |
20,782 |
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
For the Quarters Ended |
|
For the Years Ended |
||||||||
|
September 29, |
|
September 30, |
|
September 29, |
|
September 30, |
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
|
(in millions) |
||||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
552 |
|
$ |
708 |
|
$ |
1,910 |
|
$ |
2,428 |
(Income) loss from discontinued operations, net of income taxes |
|
1 |
|
|
— |
|
|
(6) |
|
|
(1) |
Income from continuing operations |
|
553 |
|
|
708 |
|
|
1,904 |
|
|
2,427 |
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
200 |
|
|
188 |
|
|
794 |
|
|
785 |
Deferred income taxes |
|
44 |
|
|
(129) |
|
|
(77) |
|
|
(147) |
Non-cash lease cost |
|
23 |
|
|
33 |
|
|
129 |
|
|
131 |
Provision for losses on accounts receivable and inventories |
|
(6) |
|
|
(9) |
|
|
76 |
|
|
70 |
Share-based compensation expense |
|
28 |
|
|
31 |
|
|
123 |
|
|
119 |
Impairment of held for sale businesses |
|
7 |
|
|
14 |
|
|
74 |
|
|
14 |
Other |
|
16 |
|
|
28 |
|
|
101 |
|
|
9 |
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: |
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
56 |
|
|
308 |
|
|
(146) |
|
|
200 |
Inventories |
|
278 |
|
|
398 |
|
|
(45) |
|
|
(41) |
Prepaid expenses and other current assets |
|
47 |
|
|
(7) |
|
|
17 |
|
|
50 |
Accounts payable |
|
(69) |
|
|
(348) |
|
|
(1) |
|
|
(396) |
Accrued and other current liabilities |
|
35 |
|
|
(82) |
|
|
21 |
|
|
(398) |
Income taxes |
|
(34) |
|
|
(21) |
|
|
17 |
|
|
32 |
Other |
|
(40) |
|
|
(168) |
|
|
145 |
|
|
(387) |
Net cash provided by operating activities |
|
1,138 |
|
|
944 |
|
|
3,132 |
|
|
2,468 |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
(194) |
|
|
(212) |
|
|
(732) |
|
|
(768) |
Proceeds from sale of property, plant, and equipment |
|
1 |
|
|
8 |
|
|
4 |
|
|
106 |
Acquisition of businesses, net of cash acquired |
|
(2) |
|
|
(104) |
|
|
(110) |
|
|
(220) |
Proceeds from divestiture of businesses, net of cash retained by businesses sold |
|
— |
|
|
— |
|
|
48 |
|
|
16 |
Other |
|
— |
|
|
(2) |
|
|
22 |
|
|
(12) |
Net cash used in investing activities |
|
(195) |
|
|
(310) |
|
|
(768) |
|
|
(878) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in commercial paper |
|
42 |
|
|
133 |
|
|
(40) |
|
|
370 |
Proceeds from issuance of debt |
|
— |
|
|
— |
|
|
499 |
|
|
588 |
Repayment of debt |
|
— |
|
|
— |
|
|
(591) |
|
|
(558) |
Proceeds from exercise of share options |
|
10 |
|
|
20 |
|
|
43 |
|
|
54 |
Repurchase of common shares |
|
(271) |
|
|
(326) |
|
|
(945) |
|
|
(1,412) |
Payment of common share dividends to shareholders |
|
(184) |
|
|
(179) |
|
|
(725) |
|
|
(685) |
Other |
|
(4) |
|
|
(2) |
|
|
(34) |
|
|
(41) |
Net cash used in financing activities |
|
(407) |
|
|
(354) |
|
|
(1,793) |
|
|
(1,684) |
Effect of currency translation on cash |
|
(6) |
|
|
(12) |
|
|
2 |
|
|
(21) |
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
530 |
|
|
268 |
|
|
573 |
|
|
(115) |
Cash, cash equivalents, and restricted cash at beginning of period |
|
1,131 |
|
|
820 |
|
|
1,088 |
|
|
1,203 |
Cash, cash equivalents, and restricted cash at end of period |
$ |
1,661 |
|
$ |
1,088 |
|
$ |
1,661 |
|
$ |
1,088 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
Interest paid on debt, net |
$ |
27 |
|
$ |
19 |
|
$ |
75 |
|
$ |
58 |
Income taxes paid, net of refunds |
|
71 |
|
|
95 |
|
|
425 |
|
|
421 |
TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
|
For the Quarters Ended |
|
For the Years Ended |
||||||||
|
September 29, |
|
September 30, |
|
September 29, |
|
September 30, |
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
|
(in millions) |
||||||||||
Net cash provided by operating activities |
$ |
1,138 |
|
$ |
944 |
|
$ |
3,132 |
|
$ |
2,468 |
Excluding: |
|
|
|
|
|
|
|
|
|
|
|
Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts |
|
— |
|
|
5 |
|
|
— |
|
|
(23) |
Capital expenditures, net |
|
(193) |
|
|
(204) |
|
|
(728) |
|
|
(662) |
Free cash flow (1) |
$ |
945 |
|
$ |
745 |
|
$ |
2,404 |
|
$ |
1,783 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures. | |||||||||||
TE CONNECTIVITY LTD.
CONSOLIDATED SEGMENT DATA (UNAUDITED)
|
For the Quarters Ended |
|
|
For the Years Ended |
|
||||||||||||||||||
|
September 29, |
|
|
September 30, |
|
|
September 29, |
|
|
September 30, |
|
||||||||||||
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||||||
|
($ in millions) |
|
|||||||||||||||||||||
|
Net Sales |
|
|
|
|
Net Sales |
|
|
|
|
Net Sales |
|
|
|
|
Net Sales |
|
|
|
||||
Transportation Solutions |
$ |
2,413 |
|
|
|
|
$ |
2,447 |
|
|
|
|
$ |
9,588 |
|
|
|
|
$ |
9,219 |
|
|
|
Industrial Solutions |
|
1,159 |
|
|
|
|
|
1,244 |
|
|
|
|
|
4,551 |
|
|
|
|
|
4,490 |
|
|
|
Communications Solutions |
|
463 |
|
|
|
|
|
668 |
|
|
|
|
|
1,895 |
|
|
|
|
|
2,572 |
|
|
|
Total |
$ |
4,035 |
|
|
|
|
$ |
4,359 |
|
|
|
|
$ |
16,034 |
|
|
|
|
$ |
16,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
Operating |
|
|
Operating |
|
Operating |
|
|
Operating |
|
Operating |
|
|
Operating |
|
Operating |
|
||||
|
Income |
|
Margin |
|
|
Income |
|
Margin |
|
|
Income |
|
Margin |
|
|
Income |
|
Margin |
|
||||
Transportation Solutions |
$ |
411 |
|
17.0 |
% |
|
$ |
347 |
|
14.2 |
% |
|
$ |
1,451 |
|
15.1 |
% |
|
$ |
1,534 |
|
16.6 |
% |
Industrial Solutions |
|
162 |
|
14.0 |
|
|
|
177 |
|
14.2 |
|
|
|
602 |
|
13.2 |
|
|
|
607 |
|
13.5 |
|
Communications Solutions |
|
62 |
|
13.4 |
|
|
|
136 |
|
20.4 |
|
|
|
251 |
|
13.2 |
|
|
|
615 |
|
23.9 |
|
Total |
$ |
635 |
|
15.7 |
% |
|
$ |
660 |
|
15.1 |
% |
|
$ |
2,304 |
|
14.4 |
% |
|
$ |
2,756 |
|
16.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
$ |
444 |
|
18.4 |
% |
|
$ |
407 |
|
16.6 |
% |
|
$ |
1,665 |
|
17.4 |
% |
|
$ |
1,618 |
|
17.6 |
% |
Industrial Solutions |
|
184 |
|
15.9 |
|
|
|
204 |
|
16.4 |
|
|
|
713 |
|
15.7 |
|
|
|
705 |
|
15.7 |
|
Communications Solutions |
|
71 |
|
15.3 |
|
|
|
146 |
|
21.9 |
|
|
|
299 |
|
15.8 |
|
|
|
643 |
|
25.0 |
|
Total |
$ |
699 |
|
17.3 |
% |
|
$ |
757 |
|
17.4 |
% |
|
$ |
2,677 |
|
16.7 |
% |
|
$ |
2,966 |
|
18.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures. |
|
||||||||||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NET SALES GROWTH (DECLINE) (UNAUDITED)
|
Change in Net Sales for the Quarter Ended September 29, 2023 |
||||||||||||||||
|
versus Net Sales for the Quarter Ended September 30, 2022 |
||||||||||||||||
|
Net Sales |
|
|
Organic Net Sales |
|
|
|
|
Acquisitions/ |
||||||||
|
Growth (Decline) |
|
|
Growth (Decline) (1) |
|
|
Translation (2) |
|
(Divestiture) |
||||||||
|
($ in millions) |
||||||||||||||||
Transportation Solutions (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive |
$ |
35 |
|
2.0 |
% |
|
$ |
11 |
|
0.8 |
% |
|
$ |
24 |
|
$ |
— |
Commercial transportation |
|
(54) |
|
(12.8) |
|
|
|
(59) |
|
(14.1) |
|
|
|
5 |
|
|
— |
Sensors |
|
(15) |
|
(5.0) |
|
|
|
(21) |
|
(7.2) |
|
|
|
6 |
|
|
— |
Total |
|
(34) |
|
(1.4) |
|
|
|
(69) |
|
(2.8) |
|
|
|
35 |
|
|
— |
Industrial Solutions (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial equipment |
|
(125) |
|
(24.4) |
|
|
|
(137) |
|
(26.9) |
|
|
|
12 |
|
|
— |
Aerospace, defense, and marine |
|
10 |
|
3.2 |
|
|
|
21 |
|
6.7 |
|
|
|
7 |
|
|
(18) |
Energy |
|
6 |
|
2.7 |
|
|
|
(5) |
|
(2.2) |
|
|
|
2 |
|
|
9 |
Medical |
|
24 |
|
12.4 |
|
|
|
23 |
|
11.9 |
|
|
|
1 |
|
|
— |
Total |
|
(85) |
|
(6.8) |
|
|
|
(98) |
|
(7.9) |
|
|
|
22 |
|
|
(9) |
Communications Solutions (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data and devices |
|
(140) |
|
(32.3) |
|
|
|
(143) |
|
(33.1) |
|
|
|
2 |
|
|
1 |
Appliances |
|
(65) |
|
(27.7) |
|
|
|
(66) |
|
(27.9) |
|
|
|
1 |
|
|
— |
Total |
|
(205) |
|
(30.7) |
|
|
|
(209) |
|
(31.3) |
|
|
|
3 |
|
|
1 |
Total |
$ |
(324) |
|
(7.4) |
% |
|
$ |
(376) |
|
(8.6) |
% |
|
$ |
60 |
|
$ |
(8) |
|
Change in Net Sales for the Year Ended September 29, 2023 |
||||||||||||||||
|
versus Net Sales for the Year Ended September 30, 2022 |
||||||||||||||||
|
Net Sales |
|
|
Organic Net Sales |
|
|
|
|
Acquisitions/ |
||||||||
|
Growth (Decline) |
|
|
Growth (Decline) (1) |
|
|
Translation (2) |
|
(Divestiture) |
||||||||
|
($ in millions) |
||||||||||||||||
Transportation Solutions (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive |
$ |
424 |
|
6.5 |
% |
|
$ |
662 |
|
10.2 |
% |
|
$ |
(238) |
|
$ |
— |
Commercial transportation |
|
(57) |
|
(3.6) |
|
|
|
(17) |
|
(1.1) |
|
|
|
(40) |
|
|
— |
Sensors |
|
2 |
|
0.2 |
|
|
|
20 |
|
1.8 |
|
|
|
(18) |
|
|
— |
Total |
|
369 |
|
4.0 |
|
|
|
665 |
|
7.2 |
|
|
|
(296) |
|
|
— |
Industrial Solutions (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial equipment |
|
(198) |
|
(10.4) |
|
|
|
(154) |
|
(8.1) |
|
|
|
(44) |
|
|
— |
Aerospace, defense, and marine |
|
91 |
|
8.4 |
|
|
|
139 |
|
12.8 |
|
|
|
(10) |
|
|
(38) |
Energy |
|
79 |
|
9.8 |
|
|
|
77 |
|
9.6 |
|
|
|
(22) |
|
|
24 |
Medical |
|
89 |
|
12.8 |
|
|
|
91 |
|
13.1 |
|
|
|
(2) |
|
|
— |
Total |
|
61 |
|
1.4 |
|
|
|
153 |
|
3.4 |
|
|
|
(78) |
|
|
(14) |
Communications Solutions (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data and devices |
|
(444) |
|
(27.6) |
|
|
|
(437) |
|
(27.2) |
|
|
|
(26) |
|
|
19 |
Appliances |
|
(233) |
|
(24.1) |
|
|
|
(211) |
|
(21.8) |
|
|
|
(22) |
|
|
— |
Total |
|
(677) |
|
(26.3) |
|
|
|
(648) |
|
(25.2) |
|
|
|
(48) |
|
|
19 |
Total |
$ |
(247) |
|
(1.5) |
% |
|
$ |
170 |
|
1.0 |
% |
|
$ |
(422) |
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Organic net sales growth (decline) is a non-GAAP financial measure. See description of non-GAAP financial measures. | |||||||||||||||||
(2) Represents the change in net sales resulting from changes in foreign currency exchange rates. | |||||||||||||||||
(3) Industry end market information is presented consistently with our internal management reporting and may be periodically revised as management deems necessary. | |||||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended September 29, 2023
(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 |
$ |
411 |
|
|
$ |
1 |
|
$ |
32 |
|
$ |
— |
|
$ |
444 |
|
Industrial Solutions |
|
162 |
|
|
|
6 |
|
|
16 |
|
|
— |
|
|
184 |
|
Communications Solutions |
|
62 |
|
|
|
— |
|
|
9 |
|
|
— |
|
|
71 |
|
Total |
$ |
635 |
|
|
$ |
7 |
|
$ |
57 |
|
$ |
— |
|
$ |
699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
15.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
17.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
$ |
(3) |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
$ |
(81) |
|
|
$ |
(1) |
|
$ |
(3) |
|
$ |
(49) |
|
$ |
(134) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
19.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
553 |
|
|
$ |
6 |
|
$ |
54 |
|
$ |
(49) |
|
$ |
564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations |
$ |
1.75 |
|
|
$ |
0.02 |
|
$ |
0.17 |
|
$ |
(0.16) |
|
$ |
1.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 benefits associated with a decrease in the valuation allowance for certain tax loss and credit carryforwards. |
|
|||||||||||||||
(3) See description of non-GAAP financial measures. |
|
|||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended September 30, 2022
(UNAUDITED)
|
|
|
|
|
Adjustments |
|
|
|
|
|||||||
|
|
|
|
Acquisition- |
|
Restructuring |
|
|
|
|
|
|||||
|
|
|
|
Related |
|
and Other |
|
|
|
Adjusted |
|
|||||
|
U.S. GAAP |
|
|
Charges (1) |
|
Charges, Net (1) |
|
Tax Items (2) |
|
(Non-GAAP) (3) |
|
|||||
|
($ in millions, except per share data) |
|
||||||||||||||
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Solutions |
$ |
347 |
|
|
$ |
4 |
|
$ |
56 |
|
$ |
— |
|
$ |
407 |
|
Industrial Solutions |
|
177 |
|
|
|
8 |
|
|
19 |
|
|
— |
|
|
204 |
|
Communications Solutions |
|
136 |
|
|
|
3 |
|
|
7 |
|
|
— |
|
|
146 |
|
Total |
$ |
660 |
|
|
$ |
15 |
|
$ |
82 |
|
$ |
— |
|
$ |
757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
15.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
17.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
$ |
4 |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit |
$ |
56 |
|
|
$ |
(3) |
|
$ |
(16) |
|
$ |
(182) |
|
$ |
(145) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
(8.6) |
% |
|
|
|
|
|
|
|
|
|
|
|
19.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
708 |
|
|
$ |
12 |
|
$ |
66 |
|
$ |
(182) |
|
$ |
604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations |
$ |
2.21 |
|
|
$ |
0.04 |
|
$ |
0.21 |
|
$ |
(0.57) |
|
$ |
1.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $67 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. |
|
|||||||||||||||
(3) See description of non-GAAP financial measures. |
|
|||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Year Ended September 29, 2023
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|||||||
|
|
|
|
Acquisition- |
|
Restructuring |
|
|
|
|
|
|||||
|
|
|
|
Related |
|
and Other |
|
|
|
Adjusted |
|
|||||
|
U.S. GAAP |
|
|
Charges (1) |
|
Charges, Net (1) |
|
Tax Items (2) |
|
(Non-GAAP) (3) |
|
|||||
|
($ in millions, except per share data) |
|
||||||||||||||
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Solutions |
$ |
1,451 |
|
|
$ |
3 |
|
$ |
211 |
|
$ |
— |
|
$ |
1,665 |
|
Industrial Solutions |
|
602 |
|
|
|
27 |
|
|
84 |
|
|
— |
|
|
713 |
|
Communications Solutions |
|
251 |
|
|
|
3 |
|
|
45 |
|
|
— |
|
|
299 |
|
Total |
$ |
2,304 |
|
|
$ |
33 |
|
$ |
340 |
|
$ |
— |
|
$ |
2,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
14.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
16.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
$ |
(16) |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
$ |
(364) |
|
|
$ |
(6) |
|
$ |
(85) |
|
$ |
(49) |
|
$ |
(504) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
16.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
19.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
1,904 |
|
|
$ |
27 |
|
$ |
255 |
|
$ |
(49) |
|
$ |
2,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations |
$ |
6.01 |
|
|
$ |
0.09 |
|
$ |
0.80 |
|
$ |
(0.15) |
|
$ |
6.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 benefits associated with a decrease in the valuation allowance for certain tax loss and credit carryforwards. |
|
|||||||||||||||
(3) See description of non-GAAP financial measures. |
|
|||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Year Ended September 30, 2022
(UNAUDITED)
|
|
|
|
|
Adjustments |
|
|
|
|
|||||||
|
|
|
|
Acquisition- |
|
Restructuring |
|
|
|
|
|
|||||
|
|
|
|
Related |
|
and Other |
|
|
|
Adjusted |
|
|||||
|
U.S. GAAP |
|
|
Charges (1) |
|
Charges, Net (1)(2) |
|
Tax Items (3) |
|
(Non-GAAP) (4) |
|
|||||
|
($ in millions, except per share data) |
|
||||||||||||||
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Solutions |
$ |
1,534 |
|
|
$ |
16 |
|
$ |
68 |
|
$ |
— |
|
$ |
1,618 |
|
Industrial Solutions |
|
607 |
|
|
|
32 |
|
|
66 |
|
|
— |
|
|
705 |
|
Communications Solutions |
|
615 |
|
|
|
5 |
|
|
23 |
|
|
— |
|
|
643 |
|
Total |
$ |
2,756 |
|
|
$ |
53 |
|
$ |
157 |
|
$ |
— |
|
$ |
2,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
16.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
18.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
$ |
28 |
|
|
$ |
— |
|
$ |
— |
|
$ |
(11) |
|
$ |
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
$ |
(306) |
|
|
$ |
(11) |
|
$ |
(34) |
|
$ |
(200) |
|
$ |
(551) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
11.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
18.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
2,427 |
|
|
$ |
42 |
|
$ |
123 |
|
$ |
(211) |
|
$ |
2,381 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations |
$ |
7.47 |
|
|
$ |
0.13 |
|
$ |
0.38 |
|
$ |
(0.65) |
|
$ |
7.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $141 million recorded in net restructuring and other charges and $16 million recorded in cost of sales. |
|
|||||||||||||||
(3) Includes a $124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. Also includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the terms of the purchase agreement. |
|
|||||||||||||||
(4) See description of non-GAAP financial measures. |
|
|||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended December 30, 2022
(UNAUDITED)
|
|
|
|
|
Adjustments |
|
|
|
|
||||
|
|
|
|
Acquisition- |
|
Restructuring |
|
|
|
||||
|
|
|
|
Related |
|
and Other |
|
Adjusted |
|
||||
|
U.S. GAAP |
|
|
Charges (1) |
|
Charges, Net (1) |
|
(Non-GAAP) (2) |
|
||||
|
($ in millions, except per share data) |
|
|||||||||||
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation Solutions |
$ |
282 |
|
|
$ |
2 |
|
$ |
74 |
|
$ |
358 |
|
Industrial Solutions |
|
156 |
|
|
|
6 |
|
|
13 |
|
|
175 |
|
Communications Solutions |
|
64 |
|
|
|
1 |
|
|
24 |
|
|
89 |
|
Total |
$ |
502 |
|
|
$ |
9 |
|
$ |
111 |
|
$ |
622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
13.1 |
% |
|
|
|
|
|
|
|
|
16.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
$ |
(5) |
|
|
$ |
— |
|
$ |
— |
|
$ |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
$ |
(87) |
|
|
$ |
(2) |
|
$ |
(29) |
|
$ |
(118) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
17.9 |
% |
|
|
|
|
|
|
|
|
19.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
398 |
|
|
$ |
7 |
|
$ |
82 |
|
$ |
487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations |
$ |
1.25 |
|
|
$ |
0.02 |
|
$ |
0.26 |
|
$ |
1.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. |
|
||||||||||||
(2) See description of non-GAAP financial measures. |
|
||||||||||||
TE CONNECTIVITY LTD.
IMPACT OF ADDITIONAL WEEK
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Net Sales for the Quarter Ended |
|
|
Change in Organic Net Sales for the Quarter Ended |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
September 29, 2023 versus Net Sales for the |
|
|
September 29, 2023 versus Organic Net Sales for the |
|
||||||||||||
|
For the |
|
For the Quarter Ended September 30, 2022 |
|
Quarter Ended September 30, 2022 |
|
|
Quarter Ended September 30, 2022 |
|
||||||||||||||||||||
|
Quarter Ended |
|
|
|
Adjustment |
|
|
|
|
|
|
Adjustment |
|
|
|
|
|
|
|
|
Adjustment |
|
|
|
|
||||
|
September 29, |
|
14 Weeks |
|
Impact of |
|
13 Weeks |
|
14 Weeks |
|
|
Impact of |
|
|
13 Weeks |
|
|
14 Weeks |
|
|
Impact of |
|
|
13 Weeks |
|
||||
|
2023 |
|
U.S. GAAP |
|
14th Week |
|
(Non-GAAP) (3)(4) |
|
U.S. GAAP |
|
|
14th Week |
|
|
(Non-GAAP) (3)(4) |
|
|
(Non-GAAP) (3) |
|
|
14th Week |
|
|
(Non-GAAP) (3)(4) |
|
||||
|
($ in millions) |
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
4,035 |
|
$ |
4,359 |
|
$ |
(306) |
|
$ |
4,053 |
|
(7.4) |
% |
|
7.0 |
% |
|
(0.4) |
% |
|
(8.6) |
% |
|
7.1 |
% |
|
(1.5) |
% |
|
|
For the Quarter Ended September 30, 2022 |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
Adjustment |
|
|
|||||||||
|
|
|
|
Acquisition |
|
Restructuring |
|
|
|
14 Weeks |
|
|
|
13 Weeks |
||||||
|
|
|
|
Related |
|
and Other |
|
|
|
Adjusted |
|
Impact of |
|
Adjusted |
||||||
|
U.S. GAAP |
|
Charges (1) |
|
Charges, Net (1) |
|
Tax Items (2) |
|
(Non-GAAP) (3) |
|
14th Week |
|
(Non-GAAP) (3)(4) |
|||||||
Diluted earnings per share from continuing operations |
$ |
2.21 |
|
$ |
0.04 |
|
$ |
0.21 |
|
$ |
(0.57) |
|
$ |
1.88 |
|
$ |
(0.13) |
|
$ |
1.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $67 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. | ||||||||||||||||||||
(3) See description of non-GAAP financial measures. | ||||||||||||||||||||
(4) Excludes the impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales and adjusted earnings per share for the fourth quarter of the fiscal year. | ||||||||||||||||||||
TE CONNECTIVITY LTD.
IMPACT OF ADDITIONAL WEEK
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Net Sales for Fiscal 2023 |
|
|
Change in Organic Net Sales for Fiscal 2023 |
|
||||||||||||
|
|
|
|
Fiscal 2022 |
|
versus Net Sales for Fiscal 2022 |
|
|
versus Organic Net Sales for Fiscal 2022 |
|
|||||||||||||||||||
|
|
|
|
|
|
|
Adjustment |
|
|
|
|
|
|
|
Adjustment |
|
|
|
|
|
|
|
|
Adjustment |
|
|
|
|
|
|
|
|
|
53 Weeks |
|
Impact of |
|
52 Weeks |
|
53 Weeks |
|
|
Impact of |
|
|
52 Weeks |
|
|
53 Weeks |
|
|
Impact of |
|
|
52 Weeks |
|
|||
|
Fiscal 2023 |
|
U.S. GAAP |
|
53rd Week |
|
(Non-GAAP) (4)(5) |
|
U.S. GAAP |
|
|
53rd Week |
|
|
(Non-GAAP) (4)(5) |
|
|
(Non-GAAP) (4) |
|
|
53rd Week |
|
|
(Non-GAAP) (4)(5) |
|
||||
|
($ in millions) |
|
|||||||||||||||||||||||||||
Net sales |
$ |
16,034 |
|
$ |
16,281 |
|
$ |
(306) |
|
$ |
15,975 |
|
(1.5) |
% |
|
1.9 |
% |
|
0.4 |
% |
|
1.0 |
% |
|
2.0 |
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3.0 |
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For the Year Ended September 30, 2022 |
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Adjustments |
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Adjustment |
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Acquisition |
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Restructuring |
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53 Weeks |
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52 Weeks |
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Related |
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and Other |
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Adjusted |
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Impact of |
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U.S. GAAP |
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Charges (1) |
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Charges, Net (1)(2) |
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Tax Items (3) |
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(Non-GAAP) (4) |
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14th Week |
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(Non-GAAP) (4)(5) |
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Diluted earnings per share from continuing operations |
$ |
7.47 |
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$ |
0.13 |
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$ |
0.38 |
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$ |
(0.65) |
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$ |
7.33 |
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$ |
(0.13) |
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$ |
7.20 |
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(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 $141 million recorded in net restructuring and other charges and $16 million recorded in cost of sales. | ||||||||||||||||||||
(3) Includes a $124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. Also includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the terms of the purchase agreement. | ||||||||||||||||||||
(4) See description of non-GAAP financial measures. | ||||||||||||||||||||
(5) Excludes the impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales and adjusted earnings per share for the fourth quarter of the fiscal year. | ||||||||||||||||||||
TE CONNECTIVITY LTD.
RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of November 1, 2023
(UNAUDITED)
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Outlook for |
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Quarter Ending |
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December 29, |
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2023 |
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Diluted earnings per share from continuing operations |
$ |
1.59 |
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Restructuring and other charges, net |
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0.10 |
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Acquisition-related charges |
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0.01 |
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Adjusted diluted earnings per share from continuing operations (1) |
$ |
1.70 |
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Net sales growth (decline) |
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0.2 |
% |
Translation |
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(0.4) |
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(Acquisitions) divestitures, net |
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(0.3) |
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Organic net sales growth (1) |
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(0.5) |
% |
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(1) See description of non-GAAP financial measures. | |||
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EVERY CONNECTION COUNTS TE Connectivity Fourth Quarter 2023 Earnings November 1, 2023 |
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Forward-Looking Statements and Non-GAAP Financial Measures 2 Forward-Looking Statements This presentation contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation 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 presentation 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, such as the coronavirus disease 2019 (“COVID-19”) negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate, including continuing military conflict between Russia and Ukraine resulting from Russia’s invasion of Ukraine or escalating tensions in surrounding countries; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the effects of Swiss tax reform. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. 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. 30, 2022 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. Non-GAAP Financial Measures Where we have used non-GAAP financial measures, reconciliations to the most comparable GAAP measure are provided, along with a disclosure on the usefulness of the non-GAAP financial measure, in this presentation. |
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Earnings Highlights Q4 Sales in line with Expectations & Adjusted EPS Exceeded Guidance • Sales of $4.0B, ~flat Y/Y on a reported basis, with organic growth in Transportation • Orders of $3.9B; with sequential growth in Transportation and Communications • Adjusted Operating Margins of 17.3%, with Adjusted EPS of $1.78, up 2% Y/Y • Generated record quarterly Free Cash Flow of $945M FY23 results demonstrate 1H to 2H Margin & EPS expansion • Sales of $16.0B, ~flat on a reported basis Y/Y despite FX headwinds of ~$430M • 3% organic growth Y/Y driven by the Transportation and Industrial segments • Adjusted Operating Margins of 16.7%; Adjusted EPS of $6.74 • 1H to 2H ➔ Adjusted Operating Margin expansion of 120 bps to 17.3% • Record Free Cash Flow of ~$2.4B with over 100% FCF conversion; ~$1.7B returned to shareholders Q1 Guidance • Expect Q1 Sales of ~$3.85B, flat Y/Y, with organic growth in Transportation and Industrial • Expect Adjusted EPS of ~$1.70 up over 10% Y/Y with strong margin expansion Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Organic Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Adjusted Operating Margin, Adjusted EPS, Adjusted EPS Excluding the Impact of the Additional Week, and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations. 3 Note: Comparisons to prior year exclude an additional week in Q4 FY22, which contributed sales of $306M and Adjusted EPS of $0.13 |
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Reported FY22 FY23 FY23 Q4 Growth Q4* Q3 Q4 Y/Y* Q/Q Transportation 2,327 2,374 2,418 4% 2% Industrial 1,172 1,183 1,058 (10)% (11)% Communications 480 407 424 (12)% 4% Total TE 3,979 3,964 3,900 (2)% (2)% Book to Bill 0.98 0.99 0.97 Segment Orders Summary ($ in millions) 4 • Transportation orders growth Y/Y and sequentially reflecting ongoing stable demand • Industrial order patterns reflecting seasonality and market weakness in Industrial Equipment • Communications sequential orders growth in Data & Devices driven by new orders for AI applications • Backlog remains near record levels *Q4 FY22 excludes an additional week which contributed $293M Sequential Growth in Transportation and Communications Orders |
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Transportation Solutions $2,267 $2,413 Q4 2022 Q4 2023 • Automotive organic growth across all regions. Strong performance continues to be driven by our leading position in electric vehicles along with electronification trends • Commercial Transportation organic decline driven by weakness in North America and China • Sensors organic growth in automotive applications offset by weakness in industrial applications Y/Y Growth Rates Reported Organic Automotive $1,760 10% 9% Commercial Transportation 369 (6)% (7)% Sensors 284 3% 0% Transportation Solutions $2,413 6% 5% Q4 Sales Q4 Business Performance Q4 Adjusted Operating Margin $ in Millions Reported Up 6% Organic Up 5% Margins reflecting volume growth and strong operational performance 5 Net Sales Excluding the Impact of the Additional Week, Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Organic Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Adjusted Operating Margin, Adjusted Operating Margin Excluding the Impact of the Additional Week, Adjusted EBITDA Margin, and Adjusted EBITDA Margin Excluding the Impact of the Additional Week are non-GAAP financial measures; see Appendix for descriptions and reconciliations. 16.7% 18.4% Q4 2022 Q4 2023 Adjusted EBITDA Margin 21.8% 23.5% Note: Results and comments exclude an additional week in FY22 |
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Industrial Solutions $1,160 $1,159 Q4 2022 Q4 2023 Y/Y Growth Rates Reported Organic Industrial Equipment $388 (19)% (21)% Aerospace, Defense and Marine 323 10% 14% Energy 231 11% 6% Medical 217 20% 19% Industrial Solutions $1,159 0% (1)% Margins reflect volume decline in Industrial Equipment business 16.3% 15.9% Q4 2022 Q4 2023 Adjusted EBITDA Margin 20.3% 20.5% • Industrial Equipment decline driven by destocking in our customers’ supply chain • AD&M organic growth reflects ongoing market improvement • Energy organic growth driven by North America, with continued momentum in renewable applications • Medical organic growth driven by increases in interventional procedures $ in Millions Q4 Sales Q4 Business Performance Q4 Adjusted Operating Margin Reported ~Flat Organic Down 1% 6 Note: Results and comments exclude an additional week in FY22 Net Sales Excluding the Impact of the Additional Week, Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Organic Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Adjusted Operating Margin, Adjusted Operating Margin Excluding the Impact of the Additional Week, Adjusted EBITDA Margin, and Adjusted EBITDA Margin Excluding the Impact of the Additional Week are non-GAAP financial measures; see Appendix for descriptions and reconciliations. |
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$626 $463 Q4 2022 Q4 2023 Reported Down 26% Organic Down 27% Y/Y Growth Rates Reported Organic Data & Devices $293 (28)% (28)% Appliances 170 (23)% (23)% Communications Solutions $463 (26)% (27)% • Data & Devices decline driven by ongoing destocking across our customers’ supply chain • Appliances impacted by market weakness in all regions 21.6% 15.3% Q4 2022 Q4 2023 Margin impacted by lower volume due to market weakness Communications Solutions Q4 Sales Q4 Adjusted Operating Margin Q4 Business Performance $ in Millions Adjusted EBITDA Margin 25.7% 20.1% 7 Note: Results and comments exclude an additional week in FY22 Net Sales Excluding the Impact of the Additional Week, Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Organic Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Adjusted Operating Margin, Adjusted Operating Margin Excluding the Impact of the Additional Week, Adjusted EBITDA Margin, and Adjusted EBITDA Margin Excluding the Impact of the Additional Week are non-GAAP financial measures; see Appendix for descriptions and reconciliations. |
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Q4 Financial Summary ($ in Millions, except per share amounts) Q4 FY22 Q4 FY23 Net Sales $ 4,053* $ 4,035 Operating Income $ 660 $ 635 Operating Margin 15.1% 15.7% Acquisition-Related Charges 15 7 Restructuring & Other Charges, Net 82 57 Impact of the 14th Week (54) - Adjusted Operating Income $ 703* $ 699 Adjusted Operating Margin 17.3%* 17.3% Earnings Per Share** $ 2.21 $ 1.75 Acquisition-Related Charges 0.04 0.02 Restructuring & Other Charges, Net 0.21 0.17 Tax Items (0.57) (0.16) Impact of the 14th week (0.13) - Adjusted EPS $ 1.75* $ 1.78 8 *Based on a 13-week quarter. The extra week contributed $306M to Sales, $54M to Adjusted Operating Income, and $0.13 to Adjusted EPS ** Represents Diluted Earnings Per Share from Continuing Operations Net Sales Excluding the Impact of the Additional Week, Adjusted Operating Income, Adjusted Operating Income Excluding the Impact of the Additional Week, Adjusted Operating Margin, Adjusted Operating Margin Excluding the Impact of the Additional Week, Adjusted Earnings Per Share, and Adjusted Earnings Per Share Excluding the Impact of the Additional Week are non-GAAP financial measures; see Appendix for descriptions and reconciliations. |
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Financial Performance $7.20 $6.74 FY22 FY23 16.1% 17.3% 16.7% 1H FY23 2H FY23 FY23 * Represents Net Sales in Constant Currency Net Sales in Constant Currency, Net Sales Excluding the Impact of the Additional Week, Adjusted Operating Margin, Adjusted Earnings Per Share, Adjusted Earnings Per Share Excluding the Impact of the Additional Week, and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations. Sales FY23 Adjusted Operating Margin Progression FY23 Adjusted EPS Progression Free Cash Flow 35% Increase in Y/Y Free Cash Flow Over 100% FCF conversion 9 $ in Millions $ in Millions ~$1.7B returned to shareholders $1,783 $2,404 FY22 FY23 Note: FY22 Sales and Adjusted EPS exclude an additional week in Q4 FY22, which contributed Sales of $306M and Adjusted EPS of $0.13 FX FY22 FY23 Transportation Communications Industrial $15,975 $16,034 $851* $225* ($587)* ($430) +120bps $0.45 Y/Y Headwind from FX |
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EVERY CONNECTION COUNTS Additional Information |
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Y/Y Q4 2023 Net Sales Excluding the Impact of the Additional Week, Adjusted Earnings Per Share, and Adjusted Earnings Per Share Excluding the Impact of the Additional Week are non-GAAP financial measures; see Appendix for descriptions and reconciliations. Sales (in millions) Adjusted EPS Q4 2022 Results (13 week)* $4,053 $1.75 Operational Performance (69) 0.05 FX Impact 51 (0.03) Tax Rate Impact - 0.01 Q4 2023 Results $4,035 $1.78 11 * Q4 FY22 13-week view does not include the impact of the additional week which contributed sales of $306M and Adjusted EPS of $0.13 Note: The dislocation between Y/Y FX impact on sales and Y/Y FX impact on OI is driven by strong movements in some of our sourcing currencies, where we have very minimal sales and mostly costs denominated in local currency. |
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FY 2023 1H/2H Sales (in millions) Adjusted Operating Margin Adjusted EPS 2023 1H Results $8,001 16.1% $3.17 Operational Performance (44) 0.30 FX Impact 76 0.04 Tax Rate Impact - 0.04 2023 2H Results $8,033 17.3% $3.55 12 Adjusted Operating Margin and Adjusted Earnings Per Share Week are non-GAAP financial measures; see Appendix for descriptions and reconciliations. 2H Margin & EPS Expansion Driven by Strong Execution, Offsetting Inflationary Pressures FY23 Y/Y FX Headwind of $430M to Sales & $0.45 to Adjusted EPS when comparing to a 52-week FY22 |
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Y/Y Q1 2024 Adjusted Earnings Per Share is a non-GAAP financial measure; see Appendix for description and reconciliation. Sales (in millions) Adjusted EPS Q1 2023 Results $3,841 $1.53 Operational Performance (8) 0.20 FX Impact 17 (0.02) Tax Rate Impact - (0.01) Q1 2024 Results $3,850 $1.70 13 Expect Strong EPS Expansion on Flat Sales Driven by Improving Operational Performance |
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($ in Millions) FY22 FY23 Beginning Cash Balance $1,203 $1,088 Free Cash Flow 1,783 2,404 Dividends (685) (725) Share repurchases (1,412) (945) Net increase (decrease) in debt 400 (132) Acquisition of businesses, net of cash acquired (220) (110) Other 19 81 Ending Cash Balance $1,088 $1,661 Total Debt $4,206 $4,211 A/R $2,865 $2,967 Days Sales Outstanding* 64 67 Inventory $2,676 $2,552 Days on Hand* 84 81 Accounts Payable $1,593 $1,563 Days Outstanding* 51 52 Free Cash Flow and Working Capital Liquidity, Cash and Debt ($ in Millions) FY22 FY23 Cash from Operating Activities $2,468 $3,132 Capital expenditures, net (662) (728) Cash collected pursuant to collateral requirements related to cross-currency swap contracts (23) - Free Cash Flow $1,783 $2,404 *Calculated on a quarterly basis and adjusted to exclude the impact of acquisitions Also excludes the impact of an additional week in Q4 FY22 Free Cash Flow is a non-GAAP financial measure, see Appendix for description and reconciliation Balance Sheet & Cash Flow Summary 14 |
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EVERY CONNECTION COUNTS Appendix |
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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. • Net Sales in Constant Currency – represents net sales (the most comparable GAAP measure) excluding the impact of fluctuations in foreign currency exchange rates between periods. We believe constant currency information provides valuable supplemental information regarding our sales. • Adjusted Gross Margin and Adjusted Gross Margin Percentage – represent gross margin and gross margin percentage, respectively, (the most comparable GAAP financial measures) before special items including restructuring and other charges, and acquisition-related charges, if any. • 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 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 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, 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. 16 |
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• Adjusted Earnings Per Share – represents diluted earnings 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. • Adjusted EBITDA and Adjusted EBITDA Margin - represent net income and net income as a percentage of net sales, respectively, (the most comparable GAAP financial measures) before interest expense, interest income, income taxes, depreciation, and amortization, as adjusted for net other income (expense), income (loss) from discontinued operations, and special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if any. • Net Sales Excluding the Impact of the Additional Week, Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Organic Net Sales Growth (Decline) Excluding the Impact of the Additional Week, Adjusted Gross Margin Excluding the Impact of the Additional Week, Adjusted Gross Margin Percentage Excluding the Impact of the Additional Week, Adjusted Operating Income Excluding the Impact of the Additional Week, Adjusted Operating Margin Excluding the Impact of the Additional Week, Adjusted Earnings Per Share Excluding the Impact of the Additional Week, Adjusted EBITDA Excluding the Impact of the Additional Week, and Adjusted EBITDA Margin Excluding the Impact of the Additional Week – represent certain GAAP and non-GAAP financial measures excluding the impact of the additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length. • 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 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. • Free Cash Flow Conversion – represents the ratio of Free Cash Flow to Adjusted Income from Continuing Operations. We use Free Cash Flow Conversion as an indicator of our ability to convert earnings to cash. Non-GAAP Financial Measures (cont.) 17 |
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Segment Summary 18 Transportation Solutions $ 2,413 $ 2,447 $ 9,588 $ 9,219 Industrial Solutions 1,159 1,244 4,551 4,490 Communications Solutions 463 668 1,895 2,572 Total $ 4,035 $ 4,359 $ 16,034 $ 16,281 O perating O perating O perating O perating Margin Margin Margin Margin Transportation Solutions $ 411 17.0 % $ 347 14.2 % $ 1,451 15.1 % $ 1,534 16.6 % Industrial Solutions 162 14.0 177 14.2 602 13.2 607 13.5 Communications Solutions 62 13.4 136 20.4 251 13.2 615 23.9 Total $ 635 15.7 % $ 660 15.1 % $ 2,304 14.4 % $ 2,756 16.9 % Adjusted Adjusted Adjusted Adjusted O perating O perating O perating O perating Margin (1) Margin (1) Margin (1) Margin (1) Transportation Solutions $ 444 18.4 % $ 407 16.6 % $ 1,665 17.4 % $ 1,618 17.6 % Industrial Solutions 184 15.9 204 16.4 713 15.7 705 15.7 Communications Solutions 71 15.3 146 21.9 299 15.8 643 25.0 Total $ 699 17.3 % $ 757 17.4 % $ 2,677 16.7 % $ 2,966 18.2 % (1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures. 2023 2022 ($ in millions) Adjusted O perating Income (1) Adjusted O perating Adjusted O perating Income (1) Net Sales Net Sales Net Sales Income (1) Adjusted O perating Income (1) Income O perating O perating Income O perating Income Net Sales O perating Income 2023 2022 For the Q uarters Ended September 29, September 30, September 29, September 30, For the Years Ended |
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Reconciliation of Net Sales Growth 19 Transportation Solutions (3): Automotive $ 35 2.0 % $ 11 0.8 % $ 24 $ — Commercial transportation (54) (12.8) (59) (14.1) 5 — Sensors (15) (5.0) (21) (7.2) 6 — Total (34) (1.4) (69) (2.8) 35 — Industrial Solutions (3): Industrial equipment (125) (24.4) (137) (26.9) 12 — Aerospace, defense, and marine 10 3.2 21 6.7 7 (18) Energy 6 2.7 (5) (2.2) 2 9 Medical 24 12.4 23 11.9 1 — Total (85) (6.8) (98) (7.9) 22 (9) Communications Solutions (3) : Data and devices (140) (32.3) (143) (33.1) 2 1 Appliances (65) (27.7) (66) (27.9) 1 — Total (205) (30.7) (209) (31.3) 3 1 Total $ (324) (7.4) % $ (376) (8.6) % $ 60 $ (8) ($ in millions) Translation (2) Acquisitions/ (Divestiture) Net Sales Growth (Decline) O rganic Net Sales Growth (Decline) (1) Change in Net Sales for the Q uarter Ended September 29, 2023 versus Net Sales for the Q uarter Ended September 30, 2022 Transportation Solutions (3): Automotive $ 424 6.5 % $ 662 10.2 % $ (238) $ — Commercial transportation (57) (3.6) (17) (1.1) (40) — Sensors 2 0.2 20 1.8 (18) — Total 369 4.0 665 7.2 (296) — Industrial Solutions (3) : Industrial equipment (198) (10.4) (154) (8.1) (44) — Aerospace, defense, and marine 91 8.4 139 12.8 (10) (38) Energy 79 9.8 77 9.6 (22) 24 Medical 89 12.8 91 13.1 (2) — Total 61 1.4 153 3.4 (78) (14) Communications Solutions (3): Data and devices (444) (27.6) (437) (27.2) (26) 19 Appliances (233) (24.1) (211) (21.8) (22) — Total (677) (26.3) (648) (25.2) (48) 19 Total $ (247) (1.5) % $ 170 1.0 % $ (422) $ 5 Growth (Decline) Growth (Decline) (1) Translation (2) (Divestiture) Change in Net Sales for the Year Ended September 29, 2023 versus Net Sales for the Year Ended September 30, 2022 (1) Organic net sales growth (decline) is a non-GAAP financial measure. See description of non-GAAP financial measures. (2) Represents the change in net sales resulting from changes in foreign currency exchange rates. (3) Industry end market information is presented consistently with our internal management reporting and may be periodically revised as management deems necessary. ($ in millions) Net Sales O rganic Net Sales Acquisitions/ |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 29, 2023 20 Operating income: Transportation Solutions $ 411 $ 1 $ 32 $ — $ 444 Industrial Solutions 162 6 16 — 184 Communications Solutions 62 — 9 — 71 Total $ 635 $ 7 $ 57 $ — $ 699 Operating margin 15.7 % 17.3 % Other expense, net $ (3) $ — $ — $ — $ (3) Income tax expense $ (81) $ (1) $ (3) $ (49) $ (134) Effective tax rate 12.8 % 19.2 % Income from continuing operations $ 553 $ 6 $ 54 $ (49) $ 564 Diluted earnings per share from continuing operations $ 1.75 $ 0.02 $ 0.17 $ (0.16) $ 1.78 Related and O ther Adjusted Acquisition- Restructuring Adjustments (3) See description of non-GAAP financial measures. (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. U.S. GAAP Charges (1) (Non-GAAP) (3) Charges, Net (1) Tax Items (2) ($ in millions, except per share data) (2) Represents income tax benefits associated with a decrease in the valuation allowance for certain tax loss and credit carryforwards. |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 30, 2022 21 Operating income: Transportation Solutions $ 347 $ 4 $ 56 $ — $ 407 Industrial Solutions 177 8 19 — 204 Communications Solutions 136 3 7 — 146 Total $ 660 $ 15 $ 82 $ — $ 757 Operating margin 15.1 % 17.4 % Other income, net $ 4 $ — $ — $ — $ 4 Income tax (expense) benefit $ 56 $ (3) $ (16) $ (182) $ (145) Effective tax rate (8.6) % 19.4 % Income from continuing operations $ 708 $ 12 $ 66 $ (182) $ 604 Diluted earnings per share from continuing operations $ 2.21 $ 0.04 $ 0.21 $ (0.57) $ 1.88 ($ in millions, except per share data) (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (2) Includes a $67 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. (3) See description of non-GAAP financial measures. U.S. GAAP Charges (1) Charges, Net (1) Tax Items (2) (Non-GAAP) (3) Related and O ther Adjusted Acquisition- Restructuring Adjustments |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 29, 2023 22 Operating income: Transportation Solutions $ 1,451 $ 3 $ 211 $ — $ 1,665 Industrial Solutions 602 27 84 — 713 Communications Solutions 251 3 45 — 299 Total $ 2,304 $ 33 $ 340 $ — $ 2,677 Operating margin 14.4 % 16.7 % Other expense, net $ (16) $ — $ — $ — $ (16) Income tax expense $ (364) $ (6) $ (85) $ (49) $ (504) Effective tax rate 16.0 % 19.1 % Income from continuing operations $ 1,904 $ 27 $ 255 $ (49) $ 2,137 Diluted earnings per share from continuing operations $ 6.01 $ 0.09 $ 0.80 $ (0.15) $ 6.74 Acquisition- Restructuring Adjustments ($ in millions, except per share data) (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (3) See description of non-GAAP financial measures. Related and O ther Adjusted U.S. GAAP Charges (1) Charges, Net (1) Tax Items (2) (Non-GAAP) (3) (2) Represents income tax benefits associated with a decrease in the valuation allowance for certain tax loss and credit carryforwards. |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 30, 2022 23 Operating income: Transportation Solutions $ 1,534 $ 16 $ 68 $ — $ 1,618 Industrial Solutions 607 32 66 — 705 Communications Solutions 615 5 23 — 643 Total $ 2,756 $ 53 $ 157 $ — $ 2,966 Operating margin 16.9 % 18.2 % Other income, net $ 28 $ — $ — $ (11) $ 17 Income tax expense $ (306) $ (11) $ (34) $ (200) $ (551) Effective tax rate 11.2 % 18.8 % Income from continuing operations $ 2,427 $ 42 $ 123 $ (211) $ 2,381 Diluted earnings per share from continuing operations $ 7.47 $ 0.13 $ 0.38 $ (0.65) $ 7.33 Adjustments Acquisition- Restructuring Related and O ther Adjusted U.S. GAAP Charges (1) Charges, Net (1)(2) Tax Items (3) (Non-GAAP) (4) (3) Includes a $124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. Also includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the terms of the purchase agreement. (4) See description of non-GAAP financial measures. ($ in millions, except per share data) (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (2) Includes $141 million recorded in net restructuring and other charges and $16 million recorded in cost of sales. |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 30, 2022 24 Operating income: Transportation Solutions $ 282 $ 2 $ 74 $ 358 Industrial Solutions 156 6 13 175 Communications Solutions 64 1 24 89 Total $ 502 $ 9 $ 111 $ 622 Operating margin 13.1 % 16.2 % Other expense, net $ (5) $ — $ — $ (5) Income tax expense $ (87) $ (2) $ (29) $ (118) Effective tax rate 17.9 % 19.5 % Income from continuing operations $ 398 $ 7 $ 82 $ 487 Diluted earnings per share from continuing operations $ 1.25 $ 0.02 $ 0.26 $ 1.53 ($ in millions, except per share data) (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (2) See description of non-GAAP financial measures. Related and O ther Adjusted U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (2) Acquisition- Restructuring Adjustments |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Six Months Ended March 31, 2023 25 Operating income: Transportation Solutions $ 615 $ 2 $ 152 $ 769 Industrial Solutions 290 13 46 349 Communications Solutions 134 2 32 168 Total $ 1,039 $ 17 $ 230 $ 1,286 Operating margin 13.0 % 16.1 % Other expense, net $ (9) $ — $ — $ (9) Income tax expense $ (187) $ (3) $ (55) $ (245) Effective tax rate 18.5 % 19.5 % Income from continuing operations $ 823 $ 14 $ 175 $ 1,012 Diluted earnings per share from continuing operations $ 2.58 $ 0.04 $ 0.55 $ 3.17 Acquisition- Restructuring Adjustments ($ in millions, except per share data) (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (2) See description of non-GAAP financial measures. Related and O ther Adjusted U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (2) |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 30, 2023 26 Operating income: Transportation Solutions $ 425 $ — $ 27 $ 452 Industrial Solutions 150 8 22 180 Communications Solutions 55 1 4 60 Total $ 630 $ 9 $ 53 $ 692 Operating margin 15.8 % 17.3 % Other expense, net $ (4) $ — $ — $ (4) Income tax expense $ (96) $ (2) $ (27) $ (125) Effective tax rate 15.4 % 18.2 % Income from continuing operations $ 528 $ 7 $ 26 $ 561 Diluted earnings per share from continuing operations $ 1.67 $ 0.02 $ 0.08 $ 1.77 Acquisition- Restructuring Adjustments Related and O ther Adjusted U.S. GAAP Charges (1) Charges, Net (1) (Non-GAAP) (2) ($ in millions, except per share data) (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (2) See description of non-GAAP financial measures. |
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Reconciliation of Free Cash Flow 27 Net cash provided by operating activities $ 1,138 $ 944 $ 3,132 $ 2,468 Net cash used in investing activities (195) (310) (768) (878) Net cash used in financing activities (407) (354) (1,793) (1,684) Effect of currency translation on cash (6) (12) 2 (21) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 530 $ 268 $ 573 $ (115) Net cash provided by operating activities $ 1,138 $ 944 $ 3,132 $ 2,468 Excluding: Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts — 5 — (23) Capital expenditures, net (193) (204) (728) (662) Free cash flow (1) $ 945 $ 745 $ 2,404 $ 1,783 (1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures. 2023 2022 2023 2022 (in millions) For the Q uarters Ended September 29, September 30, September 29, September 30, For the Years Ended |
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Free Cash Flow Conversion 28 Free cash flow (1) $ 2,404 Adjusted income from continuing operations (1) $ 2,137 Free cash flow conversion (1) 112.5 % For the Year Ended September 29, 2023 ($ in millions) (1) See description of non-GAAP financial measures. |
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Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin 29 Net income $ 552 $ 708 $ 1,910 $ 2,428 (Income) loss from discontinued operations 1 — (6) (1) Income tax expense (benefit) 81 (56) 364 306 Other (income) expense, net 3 (4) 16 (28) Interest expense 19 18 80 66 Interest income (21) (6) (60) (15) Operating income 635 660 2,304 2,756 Acquisition-related charges 7 15 33 53 Restructuring and other charges, net 57 82 340 157 Adjusted operating income (1) 699 757 2,677 2,966 Depreciation and amortization 200 188 794 785 Adjusted EBITDA (1) $ 899 $ 945 $ 3,471 $ 3,751 Impact of additional week in fiscal 2022 (2) (54) (54) Adjusted EBITDA excluding the impact of the additional week in fiscal 2022 (1) $ 891 $ 3,697 Net sales $ 4,035 $ 4,359 $ 16,034 $ 16,281 Impact of additional week in fiscal 2022 (2) (306) (306) Net sales excluding the impact of the additional week in fiscal 2022 (1) $ 4,053 $ 15,975 Net income as a percentage of net sales 13.7 % 16.2 % 11.9 % 14.9 % Adjusted EBITDA margin (1) 22.3 % 21.7 % 21.6 % 23.0 % Adjusted EBITDA margin excluding the impact of the additional week in fiscal 2022 (1) 22.0 % 23.1 % (1) See description of non-GAAP financial measures. September 29, 2023 For the Q uarters Ended September 30, 2022 (2) Impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales and adjusted EBITDA for the fourth quarter of the fiscal year. For the Years Ended September 29, September 30, 2023 2022 ($ in millions) |
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Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin by Segment - QTD 30 Operating income $ 411 $ 162 $ 62 $ 635 $ 347 $ 177 $ 136 $ 660 Acquisition-related charges 1 6 — 7 4 8 3 15 Restructuring and other charges, net 32 16 9 57 56 19 7 82 Adjusted operating income (1) 444 184 71 699 407 204 146 757 Depreciation and amortization 124 54 22 200 116 46 26 188 Adjusted EBITDA (1) $ 568 $ 238 $ 93 $ 899 $ 523 $ 250 $ 172 $ 945 Impact of additional week in fiscal 2022 (2) (28) (15) (11) (54) Adjusted EBITDA excluding the impact of the additional week in fiscal 2022 (1) $ 495 $ 235 $ 161 $ 891 Net sales $ 2,413 $ 1,159 $ 463 $ 4,035 $ 2,447 $ 1,244 $ 668 $ 4,359 Impact of additional week in fiscal 2022 (2) (180) (84) (42) (306) Net sales excluding the impact of the additional week in fiscal 2022 (1) $ 2,267 $ 1,160 $ 626 $ 4,053 Operating margin 17.0 % 14.0 % 13.4 % 15.7 % 14.2 % 14.2 % 20.4 % 15.1 % Adjusted operating margin (1) 18.4 % 15.9 % 15.3 % 17.3 % 16.6 % 16.4 % 21.9 % 17.4 % Adjusted EBITDA margin (1) 23.5 % 20.5 % 20.1 % 22.3 % 21.4 % 20.1 % 25.7 % 21.7 % Adjusted EBITDA margin excluding the impact of the additional week in fiscal 2022 (1) 21.8 % 20.3 % 25.7 % 22.0 % For the Q uarters Ended September 29, 2023 September 30, 2022 Transportation Industrial Communications Transportation Industrial Communications (1) See description of non-GAAP financial measures. (2) Impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales and adjusted EBITDA for the fourth quarter of the fiscal year. ($ in millions) Solutions Solutions Solutions Total Solutions Solutions Solutions Total |
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Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin by Segment - YTD 31 Operating income $ 1,451 $ 602 $ 251 $ 2,304 $ 1,534 $ 607 $ 615 $ 2,756 Acquisition-related charges 3 27 3 33 16 32 5 53 Restructuring and other charges, net 211 84 45 340 68 66 23 157 Adjusted operating income (1) 1,665 713 299 2,677 1,618 705 643 2,966 Depreciation and amortization 484 210 100 794 505 194 86 785 Adjusted EBITDA (1) $ 2,149 $ 923 $ 399 $ 3,471 $ 2,123 $ 899 $ 729 $ 3,751 Impact of additional week in fiscal 2022 (2) (28) (15) (11) (54) Adjusted EBITDA excluding the impact of the additional week in fiscal 2022 (1) $ 2,095 $ 884 $ 718 $ 3,697 Net sales $ 9,588 $ 4,551 $ 1,895 $ 16,034 $ 9,219 $ 4,490 $ 2,572 $ 16,281 Impact of additional week in fiscal 2022 (2) (180) (84) (42) (306) Net sales excluding the impact of the additional week in fiscal 2022 (1) $ 9,039 $ 4,406 $ 2,530 $ 15,975 Operating margin 15.1 % 13.2 % 13.2 % 14.4 % 16.6 % 13.5 % 23.9 % 16.9 % Adjusted operating margin (1) 17.4 % 15.7 % 15.8 % 16.7 % 17.6 % 15.7 % 25.0 % 18.2 % Adjusted EBITDA margin (1) 22.4 % 20.3 % 21.1 % 21.6 % 23.0 % 20.0 % 28.3 % 23.0 % Adjusted EBITDA margin excluding the impact of the additional week in fiscal 2022 (1) 23.2 % 20.1 % 28.4 % 23.1 % For the Years Ended September 29, 2023 September 30, 2022 Transportation Industrial Communications Transportation Industrial Communications (1) See description of non-GAAP financial measures. (2) Impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales and adjusted EBITDA for the fourth quarter of the fiscal year. ($ in millions) Solutions Solutions Solutions Total Solutions Solutions Solutions Total |
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Impact of Additional Week on Net Sales - QTD 32 Adjustment Adjustment 14 Weeks Impact of 13 Weeks 14 Weeks Impact of 13 Weeks U.S. GAAP 14th Week (Non-GAAP) (1)(2) (Non-GAAP) (1) 14th Week (Non-GAAP) (1)(2) Net sales: Transportation Solutions Automotive $ 1,760 $ 1,725 $ (126) $ 1,599 2.0 % 8.1 % 10.1 % 0.8 % 8.1 % 8.9 % Commercial transportation 369 423 (32) 391 (12.8) 7.2 (5.6) (14.1) 7.1 (7.0) Sensors 284 299 (22) 277 (5.0) 7.5 2.5 (7.2) 7.6 0.4 Total 2,413 2,447 (180) 2,267 (1.4) 7.8 6.4 (2.8) 7.9 5.1 Industrial Solutions Industrial equipment 388 513 (35) 478 (24.4) 5.6 (18.8) (26.9) 5.7 (21.2) Aerospace, defense, and marine 323 313 (20) 293 3.2 7.0 10.2 6.7 7.6 14.3 Energy 231 225 (17) 208 2.7 8.4 11.1 (2.2) 8.0 5.8 Medical 217 193 (12) 181 12.4 7.5 19.9 11.9 7.3 19.2 Total 1,159 1,244 (84) 1,160 (6.8) 6.7 (0.1) (7.9) 6.8 (1.1) Communications Solutions Data and devices 293 433 (28) 405 (32.3) 4.6 (27.7) (33.1) 4.7 (28.4) Appliances 170 235 (14) 221 (27.7) 4.6 (23.1) (27.9) 4.8 (23.1) Total 463 668 (42) 626 (30.7) 4.7 (26.0) (31.3) 4.8 (26.5) Total $ 4,035 $ 4,359 $ (306) $ 4,053 (7.4) % 7.0 % (0.4) % (8.6) % 7.1 % (1.5) % ($ in millions) (1) See description of non-GAAP financial measures. (2) Excludes the impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales for the fourth quarter of the fiscal year. Change in Net Sales for the Q uarter Ended September 29, 2023 versus Net Sales for the Q uarter Ended September 30, 2022 Change in O rganic Net Sales for the Q uarter Ended September 29, 2023 versus O rganic Net Sales for the Q uarter Ended September 30, 2022 For the Q uarter Ended September 29, 2023 For the Q uarter Ended September 30, 2022 14 Weeks U.S. GAAP Adjustment Impact of 14th Week 13 Weeks (Non-GAAP) (1)(2) |
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Impact of Additional Week on Net Sales - YTD 33 Adjustment Adjustment 53 Weeks Impact of 52 Weeks 53 Weeks Impact of 52 Weeks U.S. GAAP 53rd Week (Non-GAAP) (1)(2) (Non-GAAP) (1) 53rd Week (Non-GAAP) (1)(2) Net sales: Transportation Solutions Automotive $ 6,951 $ 6,527 $ (126) $ 6,401 6.5 % 2.1 % 8.6 % 10.2 % 2.2 % 12.4 % Commercial transportation 1,525 1,582 (32) 1,550 (3.6) 2.0 (1.6) (1.1) 2.1 1.0 Sensors 1,112 1,110 (22) 1,088 0.2 2.0 2.2 1.8 2.1 3.9 Total 9,588 9,219 (180) 9,039 4.0 2.1 6.1 7.2 2.2 9.4 Industrial Solutions Industrial equipment 1,706 1,904 (35) 1,869 (10.4) 1.7 (8.7) (8.1) 1.8 (6.3) Aerospace, defense, and marine 1,178 1,087 (20) 1,067 8.4 2.0 10.4 12.8 2.2 15.0 Energy 883 804 (17) 787 9.8 2.4 12.2 9.6 2.4 12.0 Medical 784 695 (12) 683 12.8 2.0 14.8 13.1 2.0 15.1 Total 4,551 4,490 (84) 4,406 1.4 1.9 3.3 3.4 2.0 5.4 Communications Solutions Data and devices 1,162 1,606 (28) 1,578 (27.6) 1.2 (26.4) (27.2) 1.3 (25.9) Appliances 733 966 (14) 952 (24.1) 1.1 (23.0) (21.8) 1.2 (20.6) Total 1,895 2,572 (42) 2,530 (26.3) 1.2 (25.1) (25.2) 1.3 (23.9) Total $ 16,034 $ 16,281 $ (306) $ 15,975 (1.5) % 1.9 % 0.4 % 1.0 % 2.0 % 3.0 % (Non-GAAP) (1)(2) (1) See description of non-GAAP financial measures. (2) Excludes the impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average sales for the fourth quarter of the fiscal year. Change in Net Sales for Fiscal 2023 versus Net Sales for Fiscal 2022 Change in O rganic Net Sales for Fiscal 2023 versus O rganic Net Sales for Fiscal 2022 ($ in millions) Fiscal 2023 Fiscal 2022 53 Weeks U.S. GAAP Adjustment Impact of 53rd Week 52 Weeks |
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Impact of Additional Week - QTD 34 Gross margin $ 1,349 $ (1) $ — $ — $ 1,348 $ (96) $ 1,252 Gross margin percentage 30.9 % 30.9 % 30.9 % Operating income: Transportation Solutions $ 347 $ 4 $ 56 $ — $ 407 $ (28) $ 379 Industrial Solutions 177 8 19 — 204 (15) 189 Communications Solutions 136 3 7 — 146 (11) 135 Total $ 660 $ 15 $ 82 $ — $ 757 $ (54) $ 703 Operating margin: Transportation Solutions 14.2 % 16.6 % 16.7 % Industrial Solutions 14.2 16.4 16.3 Communications Solutions 20.4 21.9 21.6 Total 15.1 % 17.4 % 17.3 % Diluted earnings per share from continuing operations $ 2.21 $ 0.04 $ 0.21 $ (0.57) $ 1.88 $ (0.13) $ 1.75 (Non-GAAP) (3)(4) Tax Items (2) 14 Weeks (4) Excludes the impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average adjusted gross margin, adjusted operating income, and adjusted earnings per share for the fourth quarter of the fiscal year. (2) Includes a $67 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. (3) See description of non-GAAP financial measures. (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. U.S. GAAP ($ in millions, except per share data) Charges (1) Charges, Net (1) Related Restructuring and O ther 13 Weeks Adjusted Acquisition-Adjustments Adjusted (Non-GAAP) (3) Adjustment Impact of 14th Week |
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Impact of Additional Week - YTD 35 Gross margin $ 5,244 $ 8 $ 16 $ — $ 5,268 $ (96) $ 5,172 Gross margin percentage 32.2 % 32.4 % 32.4 % Operating income: Transportation Solutions $ 1,534 $ 16 $ 68 $ — $ 1,618 $ (28) $ 1,590 Industrial Solutions 607 32 66 — 705 (15) 690 Communications Solutions 615 5 23 — 643 (11) 632 Total $ 2,756 $ 53 $ 157 $ — $ 2,966 $ (54) $ 2,912 Operating margin: Transportation Solutions 16.6 % 17.6 % 17.6 % Industrial Solutions 13.5 15.7 15.7 Communications Solutions 23.9 25.0 25.0 Total 16.9 % 18.2 % 18.2 % Diluted earnings per share from continuing operations $ 7.47 $ 0.13 $ 0.38 $ (0.65) $ 7.33 $ (0.13) $ 7.20 ($ in millions, except per share data) U.S. GAAP Adjustments Acquisition-Related Charges (1) Restructuring and O ther Charges, Net (1)(2) Tax Items (3) Adjusted (Non-GAAP) (4) 53 Weeks (5) Excludes the impact of an additional week in the fourth quarter of fiscal 2022. The impact of the additional week was estimated using average adjusted gross margin, adjusted operating income, and adjusted earnings per share for the fourth quarter of the fiscal year. (3) Includes a $124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income. Also includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the terms of the purchase agreement. (2) Includes $141 million recorded in net restructuring and other charges and $16 million recorded in cost of sales. (4) See description of non-GAAP financial measures. (1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. Adjustment 52 Weeks Adjusted (Non-GAAP) (4)(5) Impact of 53rd Week |
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Reconciliation of Forward-Looking Non-GAAP Financial Measures to Forward-Looking GAAP Financial Measures 36 Diluted earnings per share from continuing operations $ 1.59 Restructuring and other charges, net 0.10 Acquisition-related charges 0.01 Adjusted diluted earnings per share from continuing operations (2) $ 1.70 Net sales growth (decline) 0.2 % Translation (0.4) (Acquisitions) divestitures, net (0.3) Organic net sales growth (decline) (2) (0.5) % Effective tax rate 19.8 % 19.9 % Effective tax rate adjustments (3) 0.2 0.1 Adjusted effective tax rate (2) 20.0 % 20.0 % Q uarter Ending O utlook for 2023 (1) December 29, O utlook for Fiscal 2024 (1) (3) Includes adjustments for special tax items and the tax effect of acquisition-related charges and net restructuring and other charges, calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. (1) Outlook is as of November 1, 2023. (2) See description of non-GAAP financial measures. |
