consistent execution of our strategy
"We continued the consistent execution of our strategy to strengthen our position as the world leader in connectivity and establish a leadership position in sensors." Tom Lynch, Chairman and Chief Executive Officer
From Our Chairman and Chief Executive Officer
The trends making our connected world safer, greener, smarter, and more connected are driving greater demand for electronics and TE Connectivity’s leading connectivity and sensor solutions. Globally, this demand represents a $170 billion market opportunity for TE, with strong underlying growth drivers. As the world leader in connectivity and a leader in sensors, we are in a great position to capitalize on this significant and growing market opportunity.
It was a very good year for TE despite another year of global uncertainty. TE led our industry, with $12.2 billion in sales, up 4 percent on an organic basis, and up 10 percent on a constant currency basis. Adjusted earnings per share (EPS) of $3.60 were up 9 percent and up 19 percent on a constant currency basis. Adjusted operating margins exceeded 16 percent for the first time in our history, reflecting our strong portfolio mix and productivity improvements generated from our TE Operating Advantage (TEOA) business system.
We also continued our balanced and disciplined approach to capital allocation. We completed four acquisitions and returned $1.7 billion to our shareholders. We raised our dividend by 14 percent, making it the fifth consecutive year of double-digit dividend increase, and repurchased 18 million shares. Since 2007, we have reduced our outstanding share count by approximately 20 percent.
A Strong Portfolio
During Fiscal Year (FY) 2015, we continued the consistent execution of our strategy to strengthen our position as the world leader in connectivity and establish a leadership position in sensors. We strengthened our connectivity and sensor portfolio with four acquisitions and the $3 billion divestiture of the Broadband Network Solutions (BNS) business. As a result, we established TE as a leader in the very attractive sensors market and expanded our position in harsh environment applications. Today, over 90 percent of our sales are focused on connectivity and sensor solutions, and 80 percent of our portfolio addresses harsh environment applications, a 40 percent increase over five years.
The Industry Leader in Harsh Environments
TE is the industry leader in harsh environment applications – applications that cannot fail even under the most extreme conditions. For example, in our medical business, our products are used in life saving procedures and improve patient outcomes. Our customers rely on our engineering depth, breadth of high-quality products, and unique ability to work side-by-side during the design process to develop their next generation of products for these critical applications.
During the year we expanded our position in harsh environment applications with a deep pipeline of design wins across our portfolio, most notably in our automotive business. In our medical business, which is part of our Industrial Solutions segment, we broadened our business through the acquisition of AdvancedCath, giving TE an even larger position in the medical device market in the growing minimally invasive catheter applications.
A World Leader in Sensors
In FY 2015, we established the company as a leading sensor supplier, with sales of approximately $750 million. With the acquisitions of Measurement Specialties and American Sensor Technologies, TE now has an unmatched range of technology in the sensor industry.
During the year, we won strategic programs across several industries. For example, TE’s sensors are designed into the next generation of thermostats to detect motion and are monitoring blood temperatures and patient safety during surgery. In our automotive business, we doubled our content opportunity in the vehicle, and leveraged our leadership position to win several new programs. And in our aerospace business, we won new customers and expanded existing relationships due to our leading sensors that measure pressure, load, and monitor flap positions in aircraft.
We expect above-market sales growth going forward, as we leverage our global leadership position across the markets we serve, our broad range of sensor technologies, and our deep industry and application expertise. Also, as customers demand more functionality in smaller packaging, we believe that integrated solutions leveraging our connector and sensor portfolios will be a competitive advantage and a significant opportunity for TE.
Delivering Extraordinary Customer Experiences
Delivering an Extraordinary Customer Experience (ECE) is our mission, and TEOA is a key driver of our performance to achieve that mission. Since its launch several years ago, TEOA enabled our industry leadership in innovation, quality, delivery, and service and support. TEOA efforts drive continuous improvements in safety, productivity, and financial performance throughout the company. Deeply entrenched across all businesses and functions, TEOA strengthens TE’s competitive advantage with customers as we improve on-time delivery and speed-to-market.
Innovating for Our Customers
Innovation is a TE core value, and FY 2015 was another year of progress for TE and our customers. We received several awards in FY 2015, including the prestigious Thomson Reuters Top 100 Global Innovators award for the fifth consecutive year and Best Innovation Practices from a Multinational Company recognition from the Shanghai government. We also announced a partnership with Andretti Technologies, the technology incubation and advanced engineering business of Andretti Autosport, to develop and test new technologies that perform at greater speeds and promote clean energy and sustainability for the transportation and mobility industries. Finally, in its eighth and best year yet, TE’s annual engineer conference – TEchCon – brought together over 500 TE engineers to advance innovation globally. These advancements are important for our customers and our efforts to recruit the best new talent for TE.
Our Commitment to Inclusion and Diversity
TE’s Inclusion and Diversity program surfaces the best ideas and is a key strategic commitment across the company, and our support for inclusion and diversity expands to individuals at all levels in the company.
In FY 2015, we launched several investments and efforts to accelerate our progress and increase the representation of women in leadership and engineering. We expanded TE’s Women’s Network globally, hosted a series of Women’s Leadership Forums around the world, kicked off a sponsorship program for women called “eXcel,” and co-founded a consortium effort to focus on early- to mid-career women’s development with the launch scheduled for early 2016.
The underlying trends driving growth in our markets remain strong, even as markets ebb and flow. We believe these trends will continue for a very long time. The world continues to demand safer products, cleaner environments, greater energy efficiency, and smarter, more connected technology. TE has never been better positioned to capitalize on these trends. We have the world’s leading portfolio of connectivity and sensor solutions, are the clear leader in attractive harsh environment markets, and have the financial strength to make the investments to meet our customers’ needs. These are very exciting times for TE. I want to thank our customers and shareholders for their continued support, and our employees for their commitment to our customers and the communities in which they live.
Tom Lynch, Chairman and Chief Executive Officer
From Our President
The continued acceleration of connected things creates significant opportunities for our customers to grow their businesses, drive innovation, and remain competitive. In FY 2015, we broadened our product range to capture these opportunities by aggressively expanding our sensor portfolio and making acquisitions in high-growth markets such as Medical. Demand for TE content is rising with the increasing demand for innovation and connectivity in our end markets. Some examples:
In aerospace, the demand for inflight entertainment and avionics systems that enable passengers, aircrafts, and crew to be connected is growing. In addition, composite airframes to improve fuel efficiency have increased the requirement for innovative approaches to aircraft grounding systems. Combined, these advances increase the opportunity for TE content - including our weight- and space-saving sensors, high-speed connectors, and fiber optic solutions - on emerging platforms up to 25 percent.
In our automotive business, the expansion of our sensors product line has doubled our content opportunity per car from $200 to almost $400 per vehicle. We expect the demand for TE content to continue to rise as automotive OEMs increase their production of smarter, more fuel efficient, and semiautonomous vehicles in the future.
Demand for TE content is rising with the increasing demand for innovation and connectivity in our end markets.
- Terrence Curtin,
In today’s factory, TE products address approximately five percent of the content in the factory. As more factories transition into digitally smart environments, we expect our content opportunity to increase to 15 percent due to the need for advanced and flexible manufacturing systems, and the increased use of sensors in robots that will drive higher levels of connections.
We believe the market opportunity is significant for TE. We expect these opportunities, coupled with our technology leadership, will lead to above market growth as TE content per application increases in the end markets we serve.
Terrence Curtin, President