November 02, 2022

Source: TE Connectivity Ltd.

Q4 sales and earnings per share exceed expectations with growth across all segments; Fiscal year sales up 9% with double-digit EPS growth

SCHAFFHAUSEN, Switzerland, Nov. 2, 2022 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fourth quarter and fiscal year ended Sept. 30, 2022. Financial results include the impact of an additional week in the fourth quarter.

Fourth Quarter Highlights

  • Net sales were $4.4 billion, up 14% on a reported basis and 21% organically year over year, with growth across all segments. On a comparable 13-week basis, sales were $4.05 billion.
  • GAAP diluted earnings per share (EPS) from continuing operations were $2.21, and adjusted EPS were $1.88, an increase of 11% versus the prior year.
  • Order levels were $4.3B with a book to bill of 0.98.
  • Record cash flow from operating activities of $944 million and record free cash flow of $745 million, continuing to demonstrate strong cash generation model.

Full Year Highlights

  • Net sales were a record at $16.3 billion, up 9% on a reported basis and 12% organically from fiscal year 2021.
  • GAAP EPS from continuing operations were $7.47, up 10% year over year, and adjusted EPS were $7.33, up 13% versus fiscal year 2021, both a company record.
  • Year-over-year margin expansion in Industrial and Communications segments.
  • Cash flow from operating activities was $2.5 billion and free cash flow was $1.8 billion, with approximately $2.1 billion returned to shareholders.

"Our strong finish and record performance in fiscal 2022 were due to both the strategic positioning of our portfolio and the ability of our global teams to continue executing in a dynamic macro environment. For the full year, we delivered double-digit organic growth, including growth in all segments, as well as double-digit EPS growth," said TE Connectivity CEO Terrence Curtin. "We remain focused on innovating with our customers around the world to enhance our leadership position in long term growth and sustainability trends including electric vehicles, cloud computing, renewable energy and factory automation applications. Our order and backlog trends remain favorable, and while we may experience cyclicality in certain markets from broader macro challenges as we enter 2023, we are confident that we are well positioned to capitalize on long-term trends that will drive future growth and value for our owners while creating a safer, sustainable, productive and connected world."

First Quarter FY23 Outlook
For the first quarter of fiscal 2023, the company expects net sales of approximately $3.75 billion, reflecting a decrease of 2% on a reported basis and an increase of 9% on an organic basis year over year. GAAP EPS from continuing operations are expected to be approximately $1.31, with adjusted EPS of approximately $1.50.

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 Nov. 2, 2022.

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.
  • Net Sales Excluding the Impact of the Additional Week – represents net sales excluding the impact of the additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length. The impact of the additional week was estimated using average sales for the fourth quarter of the fiscal year.
  • 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. 24, 2021 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 Years Ended


September 30,


September 24,


September 30,


September 24,


2022


2021


2022


2021


(in millions, except per share data)

Net sales

$

4,359


$

3,818


$

16,281


$

14,923

Cost of sales 


3,010



2,555



11,037



10,036

Gross margin


1,349



1,263



5,244



4,887

Selling, general, and administrative expenses


412



384



1,584



1,512

Research, development, and engineering expenses


179



173



718



677

Acquisition and integration costs


16



8



45



31

Restructuring and other charges, net


82



38



141



233

Operating income


660



660



2,756



2,434

Interest income


6



3



15



17

Interest expense


(18)



(14)



(66)



(56)

Other income (expense), net


4



(22)



28



(17)

Income from continuing operations before income taxes


652



627



2,733



2,378

Income tax (expense) benefit


56



167



(306)



(123)

Income from continuing operations


708



794



2,427



2,255

Income from discontinued operations, net of income taxes






1



6

Net income

$

708


$

794


$

2,428


$

2,261













Basic earnings per share:












Income from continuing operations

$

2.22


$

2.42


$

7.51


$

6.83

Income from discontinued operations








0.02

Net income


2.22



2.42



7.52



6.85













Diluted earnings per share:












Income from continuing operations

$

2.21


$

2.40


$

7.47


$

6.77

Income from discontinued operations








0.02

Net income


2.21



2.40



7.47



6.79













Weighted-average number of shares outstanding: 












Basic


319



328



323



330

Diluted


321



331



325



333

 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)














September 30,


September 24,


2022


2021


(in millions, except share data)

Assets






Current assets:






Cash and cash equivalents

$

1,088


$

1,203

Accounts receivable, net of allowance for doubtful accounts of $45 and $41, respectively


2,865



2,928

Inventories


2,676



2,511

Prepaid expenses and other current assets


639



621

Total current assets


7,268



7,263

Property, plant, and equipment, net


3,567



3,778

Goodwill


5,258



5,590

Intangible assets, net


1,288



1,549

Deferred income taxes


2,498



2,499

Other assets


903



783

Total assets

$

20,782


$

21,462

Liabilities, redeemable noncontrolling interests, and shareholders' equity






Current liabilities:






Short-term debt

$

914


$

503

Accounts payable


1,593



1,911

Accrued and other current liabilities


2,125



2,242

Total current liabilities


4,632



4,656

Long-term debt


3,292



3,589

Long-term pension and postretirement liabilities


695



1,139

Deferred income taxes


244



181

Income taxes


304



302

Other liabilities


718



847

Total liabilities


9,885



10,714

Commitments and contingencies






Redeemable noncontrolling interests


95



114

Shareholders' equity:






Common shares, CHF 0.57 par value, 330,830,781 shares authorized and issued, and 336,099,881
shares authorized and issued, respectively


146



148

Accumulated earnings 


12,832



11,709

Treasury shares, at cost, 12,749,540 and 9,060,919 shares, respectively


(1,681)



(1,055)

Accumulated other comprehensive loss


(495)



(168)

Total shareholders' equity


10,802



10,634

Total liabilities, redeemable noncontrolling interests, and shareholders' equity

$

20,782


$

21,462

 

TE CONNECTIVITY LTD.

 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


























For the Quarters Ended


For the Years Ended


September 30,


September 24,


September 30,


September 24,


2022


2021


2022


2021


(in millions)

Cash flows from operating activities:












Net income

$

708


$

794


$

2,428


$

2,261

Income from discontinued operations, net of income taxes






(1)



(6)

Income from continuing operations


708



794



2,427



2,255

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












Depreciation and amortization


188



179



785



769

Deferred income taxes


(129)



(292)



(147)



(354)

Non-cash lease cost


33



30



131



120

Provision for losses on accounts receivable and inventories


(9)



14



70



46

Share-based compensation expense


31



21



119



94

Other 


42



(16)



23



(61)

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












Accounts receivable, net


308



120



200



(518)

Inventories


398



(74)



(41)



(556)

Prepaid expenses and other current assets


(7)



(5)



50



(19)

Accounts payable


(348)



(86)



(396)



560

Accrued and other current liabilities


(82)



63



(398)



173

Income taxes


(21)



45



32



106

Other


(168)



(19)



(387)



61

Net cash provided by operating activities


944



774



2,468



2,676

Cash flows from investing activities:












Capital expenditures


(212)



(236)



(768)



(690)

Proceeds from sale of property, plant, and equipment


8



1



106



86

Acquisition of businesses, net of cash acquired


(104)



(297)



(220)



(423)

Other


(2)



(8)



4



(10)

Net cash used in investing activities


(310)



(540)



(878)



(1,037)

Cash flows from financing activities:












Net increase in commercial paper


133





370



Proceeds from issuance of debt






588



661

Repayment of debt




(2)



(558)



(708)

Proceeds from exercise of share options


20



37



54



167

Repurchase of common shares


(326)



(313)



(1,412)



(831)

Payment of common share dividends to shareholders


(179)



(164)



(685)



(647)

Other


(2)



(1)



(41)



(28)

Net cash used in financing activities


(354)



(443)



(1,684)



(1,386)

Effect of currency translation on cash


(12)



(4)



(21)



5

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

268



(213)



(115)



258

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


820



1,416



1,203



945

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

$

1,088


$

1,203


$

1,088


$

1,203













Supplemental cash flow information:












Interest paid on debt, net

$

19


$

18


$

58


$

58

Income taxes paid, net of refunds


95



80



421



371

 

TE CONNECTIVITY LTD.

RECONCILIATION OF FREE CASH FLOW (UNAUDITED)


























For the Quarters Ended


For the Years Ended


September 30,


September 24,


September 30,


September 24,


2022


2021


2022


2021


(in millions)

Net cash provided by operating activities

$

944


$

774


$

2,468


$

2,676

Excluding:












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


5



(3)



(23)



9

Capital expenditures, net


(204)



(235)



(662)



(604)

Free cash flow (1)

$

745


$

536


$

1,783


$

2,081













(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 30,



September 24,



September 30,



September 24,



2022



2021



2022



2021



($ in millions)



Net Sales





Net Sales





Net Sales





Net Sales




Transportation Solutions

$

2,447





$

2,198





$

9,219





$

8,974




Industrial Solutions


1,252






1,017






4,520






3,844




Communications Solutions


660






603






2,542






2,105




Total

$

4,359





$

3,818





$

16,281





$

14,923





















































Operating


Operating


Operating


Operating


Operating


Operating


Operating


Operating


Income


Margin


Income


Margin


Income


Margin


Income


Margin

Transportation Solutions

$

347


14.2

%


$

387


17.6

%


$

1,534


16.6

%


$

1,526


17.0

%

Industrial Solutions


180


14.4




134


13.2




620


13.7




469


12.2


Communications Solutions


133


20.2




139


23.1




602


23.7




439


20.9


Total

$

660


15.1

%


$

660


17.3

%


$

2,756


16.9

%


$

2,434


16.3

%


















































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

$

407


16.6

%


$

395


18.0

%


$

1,618


17.6

%


$

1,679


18.7

%

Industrial Solutions


207


16.5




162


15.9




718


15.9




557


14.5


Communications Solutions


143


21.7




149


24.7




630


24.8




465


22.1


Total

$

757


17.4

%


$

706


18.5

%


$

2,966


18.2

%


$

2,701


18.1

%

























(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 30, 2022


versus Net Sales for the Quarter Ended September 24, 2021


Net Sales



Organic Net Sales







Growth (Decline)



Growth (1)



Translation (2)


Acquisitions


($ in millions)

Transportation Solutions (3):


















Automotive

$

205


13.5

%


$

378


25.2

%


$

(173)


$

Commercial transportation


51


13.7




83


22.4




(32)



Sensors


(7)


(2.3)




15


5.2




(22)



Total


249


11.3




476


21.8




(227)



Industrial Solutions (3):


















Industrial equipment


135


35.0




117


30.0




(45)



63

Aerospace, defense, and marine


55


21.3




75


28.8




(20)



Energy


31


16.0




50


25.2




(19)



Medical


14


7.8




16


9.5




(2)



Total


235


23.1




258


25.1




(86)



63

Communications Solutions (3):


















Data and devices


68


19.0




60


16.9




(14)



22

Appliances


(11)


(4.5)








(11)



Total


57


9.5




60


10.2




(25)



22

Total 

$

541


14.2

%


$

794


20.9

%


$

(338)


$

85
























































Change in Net Sales for the Year Ended September 30, 2022


versus Net Sales for the Year Ended September 24, 2021


Net Sales



Organic Net Sales





Acquisitions/


Growth (Decline)



Growth (1)



Translation (2)


(Divestitures)


($ in millions)

Transportation Solutions (3):


















Automotive

$

148


2.3

%


$

515


8.1

%


$

(367)


$

Commercial transportation


115


7.8




178


12.1




(63)



Sensors


(18)


(1.6)




34


3.0




(52)



Total


245


2.7




727


8.1




(482)



Industrial Solutions (3):


















Industrial equipment


537


38.4




400


28.5




(100)



237

Aerospace, defense, and marine


52


5.0




91


8.7




(38)



(1)

Energy


66


8.9




119


16.0




(42)



(11)

Medical


21


3.1




28


4.2




(7)



Total


676


17.6




638


16.6




(187)



225

Communications Solutions (3):


















Data and devices


378


31.6




355


29.6




(30)



53

Appliances


59


6.5




83


9.2




(24)



Total


437


20.8




438


20.8




(54)



53

Total 

$

1,358


9.1

%


$

1,803


12.1

%


$

(723)


$

278



















(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 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


180




8



19





207


Communications Solutions


133




3



7





143


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. Our annual effective tax rate for fiscal 2022 includes a total income tax
benefit of $124 million related to these transactions, with portions recognized in each quarter of the fiscal year. Also includes 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 Quarter Ended September 24, 2021


(UNAUDITED)















































Adjustments









Acquisition-


Restructuring












Related


and Other






Adjusted



U.S. GAAP



Charges (1)


Charges, Net (1)


Other Items (1)(2)


Tax Items (3)


(Non-GAAP) (4)



($ in millions, except per share data)


Operating income:




















Transportation Solutions

$

387



$

3


$

5


$


$


$

395


Industrial Solutions


134




4



24







162


Communications Solutions


139




1



9







149


Total 

$

660



$

8


$

38


$


$


$

706






















Operating margin


17.3

%















18.5

%





















Other income (expense), net

$

(22)



$


$


$

28


$


$

6






















Income tax (expense) benefit

$

167



$

(1)


$

3


$

(6)


$

(304)


$

(141)






















Effective tax rate


(26.6)

%















20.1

%





















Income from continuing operations

$

794



$

7


$

41


$

22


$

(304)


$

560






















Diluted earnings per share from continuing operations

$

2.40



$

0.02


$

0.12


$

0.07


$

(0.92)


$

1.69






















(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) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract.


(3) Represents a $327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and
expected future operating profit and taxable income, and $23 million of income tax expense associated with 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


620




32



66





718


Communications Solutions


602




5



23





630


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 Year Ended September 24, 2021


(UNAUDITED)















































Adjustments









Acquisition-


Restructuring












Related


and Other






Adjusted



U.S. GAAP



Charges (1)


Charges, Net (1)


Other Items (1)(2)


Tax Items (3)


(Non-GAAP) (4)



($ in millions, except per share data)


Operating income:




















Transportation Solutions

$

1,526



$

18


$

135


$


$


$

1,679


Industrial Solutions


469




15



73







557


Communications Solutions


439




1



25







465


Total 

$

2,434



$

34


$

233


$


$


$

2,701






















Operating margin


16.3

%















18.1

%





















Other income (expense), net

$

(17)



$


$


$

28


$


$

11






















Income tax expense

$

(123)



$

(7)


$

(35)


$

(6)


$

(333)


$

(504)






















Effective tax rate


5.2

%















18.9

%





















Income from continuing operations

$

2,255



$

27


$

198


$

22


$

(333)


$

2,169






















Diluted earnings per share from continuing operations

$

6.77



$

0.08


$

0.59


$

0.07


$

(1.00)


$

6.51






















(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) Charge related to the transfer of certain U.S. pension plan liabilities to an insurance company through the purchase of a group annuity contract.


(3) Represents a $327 million income tax benefit for the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and
expected future operating profit and taxable income, $29 million of income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating
or amortizing certain assets, and $23 million of income tax expense associated with 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 Quarter Ended December 24, 2021


(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

$

395



$

3


$

(6)


$


$

392


Industrial Solutions


123




12



22





157


Communications Solutions


154




1



8





163


Total 

$

672



$

16


$

24


$


$

712



















Operating margin


17.6

%












18.6

%


















Other income, net

$

15



$


$


$

(11)


$

4



















Income tax expense

$

(110)



$

(3)


$

(7)


$

(5)


$

(125)



















Effective tax rate


16.2

%












17.7

%


















Income from continuing operations

$

567



$

13


$

17


$

(16)


$

581



















Diluted earnings per share from continuing operations

$

1.72



$

0.04


$

0.05


$

(0.05)


$

1.76



















(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 $12 million recorded in net restructuring and other charges and $12 million recorded in cost of sales.


(3) Includes a $17 million income tax benefit related to the tax impacts of an intercompany transaction. Our annual effective tax rate for fiscal 2022 includes a total income tax benefit
of $124 million related to such transactions. Also includes $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.

IMPACT OF ADDITIONAL WEEK ON NET SALES (UNAUDITED)



















































For the Quarter Ended September 30, 2022


For the





Adjustment





Quarter Ended


14 Weeks


Impact of


13 Weeks


September 24,


U.S. GAAP


14th Week


(Non-GAAP) (1)(2)


2021



 (in millions)













Net Sales

$

4,359


$

(306)


$

4,053


$

3,818













(1) 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.

(2) 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 November 2, 2022

(UNAUDITED)





Outlook for



Quarter Ending



December 30,



2022


Diluted earnings per share from continuing operations

$

1.31


Restructuring and other charges, net


0.17


Acquisition-related charges


0.02


Adjusted diluted earnings per share from continuing operations (1)

$

1.50




 . 






Net sales growth (decline)


(1.8)

%

Translation


10.5


(Acquisitions) divestitures, net


0.1


Organic net sales growth (1)


8.8

%





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

 

 

SOURCE TE Connectivity Ltd.

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