April 26, 2023

Source: TE Connectivity Ltd.

Sales above guidance driven by strong year-over-year growth in Transportation and Industrial segments

SCHAFFHAUSEN, Switzerland, April 26, 2023 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal second quarter ended March 31, 2023.

Second Quarter Highlights

  • Net sales were $4.16 billion, up 4% on a reported basis and 8% organically year over year.
    • Organic growth of 12% in the Transportation Solutions segment and 15% in the Industrial Solutions segment was partially offset by an expected decline of 20% in the Communications Solutions segment
    • Currency exchange negatively impacted sales by $155 million.
  • GAAP diluted earnings per share (EPS) from continuing operations were $1.34, and adjusted EPS exceeded guidance at $1.65.
    • GAAP and adjusted EPS impacted by $0.17 of currency and tax headwinds year over year
  • Order levels were up sequentially to $4 billion.
  • Strong cash flow from operating activities of approximately $635 million and free cash flow of approximately $445 million, with approximately $375 million returned to shareholders
  • Company named one of Fortune's World's Most Admired Companies for sixth consecutive year

"We delivered sales and earnings ahead of expectations and generated very strong cash flow during the quarter in what remains a dynamic macro environment. This performance was due to the ongoing strong execution of our global teams and the strategic positioning of our portfolio," said TE Connectivity CEO Terrence Curtin. "In our Transportation and Industrial segments, we drove organic growth across all businesses and continue to see solid demand patterns in those segments. In particular, our Automotive business continues to outperform a flat auto market due to our leading global position in electric vehicles as our customers seek out our technology to enable an increasingly electrified world. In our Industrial segment, our Medical business delivered record quarterly sales and we are continuing to capitalize on growth momentum in renewable energy applications. While our Communications segment was impacted by weaker end markets and supply chain corrections as expected, our teams are securing design wins in data center and artificial intelligence applications that will drive future growth as those markets recover.

"We continue to expect margin expansion at the company level in the second half of the year, driven by further margin improvement in our Transportation segment, as we continue to take actions to navigate market dynamics. We remain confident that we are well positioned for long-term growth and profitability."

Third Quarter FY23 Outlook

For the third quarter of fiscal 2023, the company expects net sales of approximately $4.0 billion. GAAP EPS from continuing operations are expected to be approximately $1.56, with adjusted EPS of approximately $1.65.

Information about TE Connectivity's use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables.

Conference Call and Webcast

The company will hold a conference call today beginning at 8:30 a.m. ET. The dial-in information is provided here:

  • At TE Connectivity's website: investors.te.com
  • By telephone: For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the dial-in number in the United States is (888) 330-3417 and for international callers, the dial-in number is (646) 960-0804.
  • A replay of the conference call will be available on TE Connectivity's investor website at investors.te.com at 11:30 a.m. ET on April 26, 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.
  • 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.

Forward-Looking Statements

This release contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements addressing our future financial condition and operating results, and the impact on our operations resulting from the coronavirus disease 2019 ("COVID-19"). Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, the extent, severity and duration of COVID-19 negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate, including continuing military conflict between Russia and Ukraine resulting from Russia's invasion of Ukraine or escalating tensions in surrounding countries; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the effects of Swiss tax reform. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. Such developments may include the geographic spread of the virus, the severity of the virus, the duration of the outbreak, the impact on our suppliers' and customers' supply chains, the actions that may be taken by various governmental authorities in response to the outbreak in jurisdictions in which we operate, and the possible impact on the global economy and local economies in which we operate.  More detailed information about these and other factors is set forth in TE Connectivity Ltd.'s Annual Report on Form 10-K for the fiscal year ended Sept 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.

TE CONNECTIVITY LTD.

 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


























For the Quarters Ended


For the Six Months Ended


March 31,


March 25,


March 31,


March 25,


2023


2022


2023


2022


(in millions, except per share data)

Net sales

$

4,160


$

4,007


$

8,001


$

7,825

Cost of sales 


2,876



2,670



5,530



5,258

Gross margin


1,284



1,337



2,471



2,567

Selling, general, and administrative expenses


435



416



827



779

Research, development, and engineering expenses


185



185



358



360

Acquisition and integration costs


8



10



17



18

Restructuring and other charges, net


119



21



230



33

Operating income


537



705



1,039



1,377

Interest income


12



4



21



6

Interest expense


(20)



(18)



(41)



(30)

Other income (expense), net


(4)



5



(9)



20

Income from continuing operations before income taxes


525



696



1,010



1,373

Income tax expense


(100)



(136)



(187)



(246)

Income from continuing operations


425



560



823



1,127

Income (loss) from discontinued operations, net of income taxes


8





7



(1)

Net income

$

433


$

560


$

830


$

1,126













Basic earnings per share:












Income from continuing operations

$

1.34


$

1.72


$

2.60


$

3.46

Income (loss) from discontinued operations


0.03





0.02



Net income


1.37



1.72



2.62



3.45













Diluted earnings per share:












Income from continuing operations

$

1.34


$

1.71


$

2.58


$

3.44

Income (loss) from discontinued operations


0.03





0.02



Net income


1.36



1.71



2.60



3.43













Weighted-average number of shares outstanding: 












Basic


316



325



317



326

Diluted


318



327



319



328













 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)














March 31,


September 30,


2023


2022


(in millions, except share data)

Assets






Current assets:






Cash and cash equivalents

$

905


$

1,088

Accounts receivable, net of allowance for doubtful accounts of $46 and $45, respectively


3,048



2,865

Inventories


2,811



2,676

Prepaid expenses and other current assets


675



639

Total current assets


7,439



7,268

Property, plant, and equipment, net


3,818



3,567

Goodwill


5,527



5,258

Intangible assets, net


1,286



1,288

Deferred income taxes


2,634



2,498

Other assets


786



903

Total assets

$

21,490


$

20,782

Liabilities, redeemable noncontrolling interests, and shareholders' equity






Current liabilities:






Short-term debt

$

286


$

914

Accounts payable


1,678



1,593

Accrued and other current liabilities


2,429



2,125

Total current liabilities


4,393



4,632

Long-term debt


3,916



3,292

Long-term pension and postretirement liabilities


731



695

Deferred income taxes


216



244

Income taxes


326



304

Other liabilities


782



718

Total liabilities


10,364



9,885

Commitments and contingencies






Redeemable noncontrolling interests


106



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 


11,824



12,832

Treasury shares, at cost, 7,053,036 and 12,749,540 shares, respectively


(933)



(1,681)

Accumulated other comprehensive loss


(13)



(495)

Total shareholders' equity


11,020



10,802

Total liabilities, redeemable noncontrolling interests, and shareholders' equity

$

21,490


$

20,782







 

TE CONNECTIVITY LTD.

 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


























For the Quarters Ended


For the Six Months Ended


March 31,


March 25,


March 31,


March 25,


2023


2022


2023


2022


(in millions)

Cash flows from operating activities:












Net income

$

433


$

560


$

830


$

1,126

(Income) loss from discontinued operations, net of income taxes


(8)





(7)



1

Income from continuing operations


425



560



823



1,127

Adjustments to reconcile income from continuing operations to net cash
provided by operating activities:












Depreciation and amortization


207



194



394



392

Deferred income taxes


(35)



38



(70)



42

Non-cash lease cost


36



33



70



64

Provision for losses on accounts receivable and inventories


18



35



69



68

Share-based compensation expense


31



28



63



60

Impairment of held for sale businesses


61





67



Other 


25



13



68



4

Changes in assets and liabilities, net of the effects of acquisitions and divestitures:












Accounts receivable, net


(170)



(205)



(224)



(57)

Inventories


51



(147)



(273)



(411)

Prepaid expenses and other current assets


61



(16)



(25)



36

Accounts payable


(45)





104



15

Accrued and other current liabilities


(44)



(20)



(83)



(305)

Income taxes


10



(7)



35



27

Other


3



(93)



197



(117)

Net cash provided by operating activities


634



413



1,215



945

Cash flows from investing activities:












Capital expenditures


(189)



(179)



(372)



(351)

Proceeds from sale of property, plant, and equipment


1



9



2



63

Acquisition of businesses, net of cash acquired


1



(2)



(108)



(102)

Proceeds from divestiture of businesses, net of cash retained by businesses sold


51





51



16

Other


(3)



(12)



23



(9)

Net cash used in investing activities


(139)



(184)



(404)



(383)

Cash flows from financing activities:












Net increase (decrease) in commercial paper


54



(479)



(85)



Proceeds from issuance of debt


499



588



499



588

Repayment of debt


(587)



(3)



(591)



(558)

Proceeds from exercise of share options


9



8



20



30

Repurchase of common shares


(179)



(404)



(466)



(708)

Payment of common share dividends to shareholders


(177)



(163)



(355)



(326)

Other


(4)



(7)



(28)



(38)

Net cash used in financing activities


(385)



(460)



(1,006)



(1,012)

Effect of currency translation on cash


2



(2)



12



(4)

Net increase (decrease) in cash, cash equivalents, and restricted cash


112



(233)



(183)



(454)

Cash, cash equivalents, and restricted cash at beginning of period


793



982



1,088



1,203

Cash, cash equivalents, and restricted cash at end of period

$

905


$

749


$

905


$

749













Supplemental cash flow information:












Interest paid on debt, net

$

27


$

17


$

39


$

29

Income taxes paid, net of refunds


125



106



223



177













 

TE CONNECTIVITY LTD.

RECONCILIATION OF FREE CASH FLOW (UNAUDITED)


























For the Quarters Ended


For the Six Months Ended


March 31,


March 25,


March 31,


March 25,


2023


2022


2023


2022


(in millions)

Net cash provided by operating activities

$

634


$

413


$

1,215


$

945

Excluding:












Cash collected pursuant to collateral requirements related to cross-currency swap contracts




(1)





(42)

Capital expenditures, net


(188)



(170)



(370)



(288)

Free cash flow (1)

$

446


$

242


$

845


$

615













(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.


CONSOLIDATED SEGMENT DATA (UNAUDITED)



















































For the Quarters Ended



For the Six Months Ended



March 31,



March 25,



March 31,



March 25,



2023



2022



2023



2022



($ in millions)



Net Sales





Net Sales





Net Sales





Net Sales




Transportation Solutions

$

2,483





$

2,314





$

4,742





$

4,472




Industrial Solutions


1,191






1,068






2,251






2,120




Communications Solutions


486






625






1,008






1,233




Total

$

4,160





$

4,007





$

8,001





$

7,825





















































Operating


Operating



Operating


Operating



Operating


Operating



Operating


Operating



Income


Margin



Income


Margin



Income


Margin



Income


Margin


Transportation Solutions

$

333


13.4

%


$

409


17.7

%


$

615


13.0

%


$

804


18.0

%

Industrial Solutions


134


11.3




145


13.6




290


12.9




265


12.5


Communications Solutions


70


14.4




151


24.2




134


13.3




308


25.0


Total

$

537


12.9

%


$

705


17.6

%


$

1,039


13.0

%


$

1,377


17.6

%


















































Adjusted


Adjusted



Adjusted


Adjusted



Adjusted


Adjusted



Adjusted


Adjusted



Operating


Operating



Operating


Operating



Operating


Operating



Operating


Operating



Income (1)


Margin (1)



Income (1)


Margin (1)



Income (1)


Margin (1)



Income (1)


Margin (1)


Transportation Solutions

$

411


16.6

%


$

422


18.2

%


$

769


16.2

%


$

814


18.2

%

Industrial Solutions


174


14.6




161


15.1




349


15.5




315


14.9


Communications Solutions


79


16.3




153


24.5




168


16.7




319


25.9


Total

$

664


16.0

%


$

736


18.4

%


$

1,286


16.1

%


$

1,448


18.5

%

























(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures.


























 

TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (DECLINE) (UNAUDITED)






































Change in Net Sales for the Quarter Ended March 31, 2023


versus Net Sales for the Quarter Ended March 25, 2022


Net Sales



Organic Net Sales





Acquisitions/


Growth (Decline)



Growth (Decline) (1)



Translation (2)


(Divestiture)


($ in millions)

Transportation Solutions (3):


















Automotive

$

142


8.6

%


$

226


13.6

%


$

(84)


$

Commercial transportation


11


2.8




26


6.5




(15)



Sensors


16


6.0




23


8.8




(7)



Total


169


7.3




275


11.9




(106)



Industrial Solutions (3):


















Industrial equipment


(4)


(0.9)




15


3.2




(19)



Aerospace, defense, and marine


37


14.2




48


18.6




(5)



(6)

Energy


49


26.6




51


27.7




(7)



5

Medical


41


25.9




42


26.3




(1)



Total


123


11.5




156


14.6




(32)



(1)

Communications Solutions (3):


















Data and devices


(104)


(26.5)




(97)


(24.9)




(11)



4

Appliances


(35)


(15.0)




(29)


(12.4)




(6)



Total


(139)


(22.2)




(126)


(20.2)




(17)



4

Total 

$

153


3.8

%


$

305


7.6

%


$

(155)


$

3

 


Change in Net Sales for the Six Months Ended March 31, 2023


versus Net Sales for the Six Months Ended March 25, 2022


Net Sales



Organic Net Sales





Acquisitions/


Growth (Decline)



Growth (Decline) (1)



Translation (2)


(Divestiture)


($ in millions)

Transportation Solutions (3):


















Automotive

$

271


8.5

%


$

508


16.0

%


$

(237)


$

Commercial transportation


(6)


(0.8)




33


4.4




(39)



Sensors


5


0.9




30


5.6




(25)



Total


270


6.0




571


12.8




(301)



Industrial Solutions (3):


















Industrial equipment


(25)


(2.7)




29


3.2




(54)



Aerospace, defense, and marine


59


11.7




83


16.3




(18)



(6)

Energy


50


13.4




66


17.6




(21)



5

Medical


47


14.5




49


15.2




(2)



Total


131


6.2




227


10.7




(95)



(1)

Communications Solutions (3):


















Data and devices


(131)


(17.5)




(120)


(15.9)




(24)



13

Appliances


(94)


(19.4)




(74)


(15.3)




(20)



Total


(225)


(18.2)




(194)


(15.7)




(44)



13

Total 

$

176


2.2

%


$

604


7.7

%


$

(440)


$

12




















(1) Organic net sales growth (decline) is a non-GAAP financial measure. See description of non-GAAP financial measures.

(2) Represents the change in net sales resulting from changes in foreign currency exchange rates.

(3) Industry end market information is presented consistently with our internal management reporting and may be periodically revised as management deems necessary.



















 

TE CONNECTIVITY LTD.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


For the Quarter Ended March 31, 2023


(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

$

333



$


$

78


$

411


Industrial Solutions


134




7



33



174


Communications Solutions


70




1



8



79


Total 

$

537



$

8


$

119


$

664
















Operating margin


12.9

%









16.0

%















Other expense, net

$

(4)



$


$


$

(4)
















Income tax expense

$

(100)



$

(1)


$

(26)


$

(127)
















Effective tax rate


19.0

%









19.5

%















Income from continuing operations

$

425



$

7


$

93


$

525
















Diluted earnings per share from continuing operations

$

1.34



$

0.02


$

0.29


$

1.65
















(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws

in effect for each such jurisdiction.


(2) See description of non-GAAP financial measures.
















 

TE CONNECTIVITY LTD.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


For the Quarter Ended March 25, 2022


(UNAUDITED)









































Adjustments










Acquisition-


Restructuring












Related


and Other





Adjusted



U.S. GAAP



Charges (1)


Charges, Net (1)


Tax Items (2)


(Non-GAAP) (3)



($ in millions, except per share data)


Operating income:

















Transportation Solutions

$

409



$

4


$

9


$


$

422


Industrial Solutions


145




6



10





161


Communications Solutions


151






2





153


Total 

$

705



$

10


$

21


$


$

736



















Operating margin


17.6

%












18.4

%


















Other income, net

$

5



$


$


$


$

5



















Income tax expense

$

(136)



$

(2)


$

(5)


$

8


$

(135)



















Effective tax rate


19.5

%












18.6

%


















Income from continuing operations

$

560



$

8


$

16


$

8


$

592



















Diluted earnings per share from continuing operations

$

1.71



$

0.02


$

0.05


$

0.02


$

1.81





















(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.


(2) Includes $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen on December 27, 2021 and a $19 million income tax benefit related to the tax impacts of an intercompany transaction. 


(3) See description of non-GAAP financial measures.



















 

TE CONNECTIVITY LTD.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


For the Six Months Ended March 31, 2023


(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

$

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
















(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws

in effect for each such jurisdiction.


(2) See description of non-GAAP financial measures.
















 

TE CONNECTIVITY LTD.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


For the Six Months Ended March 25, 2022


(UNAUDITED)









































Adjustments










Acquisition-


Restructuring












Related


and Other





Adjusted



U.S. GAAP



Charges (1)


Charges, Net (1)(2)


Tax Items (3)


(Non-GAAP) (4)



($ in millions, except per share data)


Operating income:

















Transportation Solutions

$

804



$

7


$

3


$


$

814


Industrial Solutions


265




18



32





315


Communications Solutions


308




1



10





319


Total 

$

1,377



$

26


$

45


$


$

1,448



















Operating margin


17.6

%












18.5

%


















Other income, net

$

20



$


$


$

(11)


$

9



















Income tax expense

$

(246)



$

(5)


$

(12)


$

3


$

(260)



















Effective tax rate


17.9

%












18.1

%


















Income from continuing operations

$

1,127



$

21


$

33


$

(8)


$

1,173



















Diluted earnings per share from continuing operations

$

3.44



$

0.06


$

0.10


$

(0.02)


$

3.58




(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.


(2) Includes $33 million recorded in net restructuring and other charges and $12 million recorded in cost of sales.


(3) Includes a $36 million income tax benefit related to the tax impacts of an intercompany transaction, $27 million of income tax expense related to the write-down of certain deferred tax assets to the lower tax rate enacted in the canton of Schaffhausen, and $12 million of income tax expense related to an income tax audit of an acquired entity, as well as the related impact of $11 million to other income pursuant to the indemnification terms of the purchase agreement.


(4) See description of non-GAAP financial measures.


 

TE CONNECTIVITY LTD.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


For the Quarter Ended June 24, 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

$

383



$

5


$

9


$


$

397


Industrial Solutions


165




6



15





186


Communications Solutions


171




1



6





178


Total 

$

719



$

12


$

30


$


$

761



















Operating margin


17.5

%












18.6

%


















Other income, net

$

4



$


$


$


$

4



















Income tax expense

$

(116)



$

(3)


$

(6)


$

(21)


$

(146)



















Effective tax rate


16.4

%












19.5

%


















Income from continuing operations

$

592



$

9


$

24


$

(21)


$

604



















Diluted earnings per share from continuing operations

$

1.83



$

0.03


$

0.07


$

(0.06)


$

1.86



















(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.


(2) Includes $26 million recorded in net restructuring and other charges and $4 million recorded in cost of sales.


(3) Includes a $21 million income tax benefit related to the tax impacts of an intercompany transaction.


(4) 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 FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES

TO FORWARD-LOOKING GAAP FINANCIAL MEASURES

As of April 26, 2023

(UNAUDITED)





Outlook for



Quarter Ending



June 30,



2023


Diluted earnings per share from continuing operations

$

1.56


Restructuring and other charges, net


0.07


Acquisition-related charges


0.02


Adjusted diluted earnings per share from continuing operations (1)

$

1.65










Net sales growth (decline)


(2.4)

%

Translation


0.4


Organic net sales growth (decline) (1)


(2.0)

%





(1) See description of non-GAAP financial measures.





 

SOURCE TE Connectivity Ltd.

Media Relations: Rachel Quimby, TE Connectivity, 610-893-9593, Rachel.Quimby@te.com, or Investor Relations: Sujal Shah, TE Connectivity, 610-893-9790, Sujal.Shah@te.com