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TE Connectivity announces results for second quarter of fiscal year 2019

Sales and earnings per share exceeded guidance; company raises full year earnings per share outlook

SCHAFFHAUSEN, Switzerland, April 24, 2019 /PRNewswire/ -- TE Connectivity Ltd. (TEL) today reported results for the fiscal second quarter, which ended March 29, 2019.

TE Connectivity Ltd. Logo. (PRNewsFoto/TE Connectivity Ltd.) (PRNewsfoto/TE Connectivity Ltd.)

Second Quarter Highlights

  • Net sales of $3.4 billion, exceeding the company's guidance
  • Diluted earnings per share (EPS) from continuing operations were $1.26, and adjusted EPS were $1.42, both exceeding the high-end of the company's guidance
  • Cash flow from continuing operating activities was $555 million and free cash flow was $344 million, with $338 million returned to shareholders
  • Orders were $3.5 billion in the quarter, 4% higher than the first quarter of 2019

Second Quarter Results

For the second quarter, the company reported net sales of $3.4 billion, with diluted EPS from continuing operations of $1.26, and adjusted EPS were $1.42. Cash flow from continuing operating activities was $555 million and free cash flow was $344 million. Year-to-date cash flow from continuing operations was $883 million, up 37% from 2018, and free cash flow year-to-date was $413 million, a 44% improvement over the prior year. Total orders were $3.5 billion, up 4% sequentially with growth in all segments, and the book-to-bill ratio was 1.01.

"I'm proud of our execution in the second quarter where we delivered sales and earnings per share above our expectations and generated strong free cash flow, despite an expected slow market environment. Our Industrial segment grew 5 percent organically year-over-year, driven by strength in our aerospace, defense and medical businesses, and our Transportation segment's content momentum allowed us to outperform automotive production weakness," said Terrence Curtin, chief executive officer of TE Connectivity. "These results reflect the diversity of our industrial technology portfolio, multiple levers in our business model and the ability of our global teams to deliver for our customers and shareholders. As a result of strong second quarter profitability and a stable outlook for the second half of fiscal 2019, we are raising our earnings per share guidance for the full year."

2019 Outlook

For the fiscal third quarter of 2019, the company expects net sales of $3.4 billion to $3.5 billion. Diluted EPS from continuing operations are expected to be $1.13 to $1.17, including net restructuring, acquisition-related and other charges of $0.28. The company expects adjusted EPS of $1.41 to $1.45.

For the full year, the company expects net sales of $13.55 billion to $13.75 billion. Diluted EPS from continuing operations are expected to be $4.88 to $4.98, including net restructuring, acquisition-related, tax and other charges of $0.67. The company expects adjusted EPS of $5.55 to $5.65.

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 (800) 230-1093, and for international callers, the dial-in number is (612) 332-0107.
  • An audio replay of the conference call will be available beginning at 10:30 a.m. ET on April 24, 2019 and ending at 11:59 p.m. ET on May 1, 2019. The dial-in number for participants in the United States is (800) 475-6701. For participants outside the United States, the dial-in number is (320) 365-3844. The replay access code for all callers is 464389.

ABOUT TE CONNECTIVITY

TE Connectivity Ltd. is a $14 billion global technology and manufacturing leader creating a safer, sustainable, productive, and connected future. For more than 75 years, our connectivity and sensor solutions, proven in the harshest environments, have enabled advancements in transportation, industrial applications, medical technology, energy, data communications, and the home. With 80,000 employees, including more than 8,000 engineers, working alongside customers in approximately 140 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedInFacebookWeChat 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 – represents net sales growth (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 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, 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 and Adjusted Effective Tax Rate – represent income tax expense 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, 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, 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, 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 continuing 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 continuing 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. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive and data and devices industries; 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; 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. 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. 28, 2018 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 29,


March 30,


March 29,


March 30,


2019


2018


2019


2018


(in millions, except per share data)

Net sales

$            3,412


$            3,562


$            6,759


$            6,898

Cost of sales 

2,294


2,350


4,527


4,522

Gross margin

1,118


1,212


2,232


2,376

Selling, general, and administrative expenses

373


409


762


786

Research, development, and engineering expenses

166


173


327


338

Acquisition and integration costs

7


3


12


5

Restructuring and other charges, net

42


6


117


40

   Operating income  

530


621


1,014


1,207

Interest income

4


4


9


8

Interest expense

(15)


(28)


(42)


(54)

Other income, net

1


1


-


3

   Income from continuing operations before income taxes

520


598


981


1,164

Income tax expense

(91)


(108)


(169)


(707)

   Income from continuing operations

429


490


812


457

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

10


-


(97)


(7)

Net income

$               439


$               490


$               715


$               450

















Basic earnings per share:








   Income from continuing operations

$              1.27


$              1.40


$              2.39


$              1.30

   Income (loss) from discontinued operations

0.03


-


(0.29)


(0.02)

   Net income

1.30


1.40


2.10


1.28









Diluted earnings per share:








   Income from continuing operations

$              1.26


$              1.38


$              2.37


$              1.29

   Income (loss) from discontinued operations

0.03


-


(0.28)


(0.02)

   Net income

1.29


1.38


2.09


1.27









Weighted-average number of shares outstanding: 








   Basic

338


351


340


351

   Diluted

340


354


342


355

 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)










March 29,


September 28,


2019


2018


(in millions, except share data)

Assets




Current assets:




Cash and cash equivalents

$               565


$               848

Accounts receivable, net of allowance for doubtful accounts of $24 and $22, respectively

2,463


2,361

Inventories

1,970


1,857

Prepaid expenses and other current assets

448


661

Assets held for sale

-


472

  Total current assets

5,446


6,199

Property, plant, and equipment, net

3,596


3,497

Goodwill

5,626


5,684

Intangible assets, net

1,596


1,704

Deferred income taxes

2,607


2,144

Other assets

391


1,158

Total assets

$          19,262


$          20,386





Liabilities and shareholders' equity




Current liabilities:




Short-term debt

$               612


$               963

Accounts payable

1,485


1,548

Accrued and other current liabilities

1,770


1,711

Liabilities held for sale

-


188

Total current liabilities

3,867


4,410

Long-term debt

3,370


3,037

Long-term pension and postretirement liabilities

1,081


1,102

Deferred income taxes

196


207

Income taxes

333


312

Other liabilities

421


487

Total liabilities

9,268


9,555

Commitments and contingencies




Shareholders' equity:




Common shares, CHF 0.57 par value, 357,069,981 shares authorized and issued

157


157

Accumulated earnings 

11,710


12,114

Treasury shares, at cost, 19,761,517 and 12,279,603 shares, respectively

(1,713)


(1,134)

Accumulated other comprehensive loss

(160)


(306)

Total shareholders' equity

9,994


10,831

Total liabilities and shareholders' equity

$          19,262


$          20,386

 

TE CONNECTIVITY LTD.

 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


















For the Quarters Ended


For the Six Months Ended


March 29,


March 30,


March 29,


March 30,


2019


2018


2019


2018


(in millions)

Cash flows from operating activities:








Net income

$               439


$               490


$               715


$               450

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

(10)


-


97


7

Income from continuing operations

429


490


812


457

Adjustments to reconcile income from continuing operations to net cash








provided by operating activities:








Depreciation and amortization

173


167


341


329

Deferred income taxes

(17)


(13)


(28)


497

Provision for losses on accounts receivable and inventories

5


8


28


25

Share-based compensation expense

15


23


38


51

Other 

14


(11)


32


(17)

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








and divestitures:








Accounts receivable, net

(81)


(237)


(107)


(376)

Inventories

49


(50)


(70)


(227)

Prepaid expenses and other current assets

24


(60)


91


(105)

Accounts payable

(35)


23


(44)


184

Accrued and other current liabilities

(16)


29


(206)


(210)

Income taxes

6


(5)


21


2

Other

(11)


(2)


(25)


35

Net cash provided by continuing operating activities

555


362


883


645

Net cash provided by (used in) discontinued operating activities

1


15


(30)


82

Net cash provided by operating activities

556


377


853


727

Cash flows from investing activities:








Capital expenditures

(191)


(202)


(401)


(439)

Proceeds from sale of property, plant, and equipment

12


7


13


7

Proceeds from divestiture of discontinued operation, net of cash 








retained by sold operation

9


-


297


-

Other

5


(2)


8


(2)

Net cash used in continuing investing activities

(165)


(197)


(83)


(434)

Net cash used in discontinued investing activities

-


(4)


(2)


(8)

Net cash used in investing activities

(165)


(201)


(85)


(442)

Cash flows from financing activities:








Net increase (decrease) in commercial paper

27


(16)


90


225

Proceeds from issuance of debt

-


-


350


119

Repayment of debt

-


-


(441)


(708)

Proceeds from exercise of share options

10


40


17


94

Repurchase of common shares

(220)


(214)


(739)


(381)

Payment of common share dividends to shareholders

(149)


(140)


(299)


(281)

Transfers (to) from discontinued operations 

1


11


(32)


74

Other

(1)


-


(30)


(32)

Net cash used in continuing financing activities

(332)


(319)


(1,084)


(890)

Net cash provided by (used in) discontinued financing activities

(1)


(11)


32


(74)

Net cash used in financing activities

(333)


(330)


(1,052)


(964)

Effect of currency translation on cash

2


9


1


20

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

60


(145)


(283)


(659)

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

505


704


848


1,218

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

$               565


$               559


$               565


$               559









Supplemental cash flow information:








Interest paid

$                 33


$                 38


$                 52


$                 79

Income taxes paid, net of refunds

102


126


177


208

 

TE CONNECTIVITY LTD.

RECONCILIATION OF FREE CASH FLOW (UNAUDITED)


















For the Quarters Ended


For the Six Months Ended


March 29,


March 30,


March 29,


March 30,


2019


2018


2019


2018


(in millions)

Net cash provided by continuing operating activities

$               555


$               362


$               883


$               645

Excluding:








Receipts related to pre-separation U.S. tax matters, net

-


(5)


-


(5)

Cash (collected) paid pursuant to collateral requirements








related to cross-currency swap contracts

(32)


61


(82)


79

Capital expenditures, net

(179)


(195)


(388)


(432)

Free cash flow (1)

$               344


$               223


$               413


$               287









(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 29,


March 30,


March 29,


March 30,


2019


2018


2019


2018


($ in millions)


Net Sales



Net Sales



Net Sales



Net Sales


Transportation Solutions

$            1,971



$            2,134



$            3,957



$            4,166


Industrial Solutions

1,007



972



1,935



1,854


Communications Solutions

434



456



867



878


Total

$            3,412



$            3,562



$            6,759



$            6,898



























Operating

Operating


Operating

Operating


Operating

Operating


Operating

Operating


Income

Margin


Income

Margin


Income

Margin


Income

Margin

Transportation Solutions

$               316

16.0%


$               427

20.0%


$               648

16.4%


$               844

20.3%

Industrial Solutions

137

13.6


125

12.9


237

12.2


227

12.2

Communications Solutions

77

17.7


69

15.1


129

14.9


136

15.5

Total

$               530

15.5%


$               621

17.4%


$            1,014

15.0%


$            1,207

17.5%


























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

$               344

17.5%


$               427

20.0%


$               700

17.7%


$               853

20.5%

Industrial Solutions

159

15.8


135

13.9


297

15.3


261

14.1

Communications Solutions

78

18.0


70

15.4


149

17.2


145

16.5

Total

$               581

17.0%


$               632

17.7%


$            1,146

17.0%


$            1,259

18.3%













(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 (UNAUDITED)






















Change in Net Sales for the Quarter Ended March 29, 2019


 versus Net Sales for the Quarter Ended March 30, 2018


Net


Organic Net






Sales Growth


Sales Growth (1)


Translation (2)


Acquisition


($ in millions)

Transportation Solutions (3):










Automotive

$              (146)

(9.3)%


$                (70)

(4.6)%


$                (76)


$                    -

Commercial transportation

(9)

(2.7)


6

1.6


(15)


-

Sensors

(8)

(3.5)


2

1.0


(10)


-

Total

(163)

(7.6)


(62)

(2.9)


(101)


-

Industrial Solutions (3):










Industrial equipment

6

1.2


5

0.8


(20)


21

Aerospace, defense, oil, and gas

33

11.1


39

13.3


(6)


-

Energy

(4)

(2.2)


9

4.2


(13)


-

Total

35

3.6


53

5.4


(39)


21

Communications Solutions (3):










Data and devices

(7)

(2.7)


-

(0.1)


(7)


-

Appliances

(15)

(7.6)


(8)

(4.1)


(7)


-

Total

(22)

(4.8)


(8)

(1.8)


(14)


-

Total 

$              (150)

(4.2)%


$                (17)

(0.5)%


$              (154)


$                 21






















Change in Net Sales for the Six Months Ended March 29, 2019


 versus Net Sales for the Six Months Ended March 30, 2018


Net


Organic Net






Sales Growth


Sales Growth (1)


Translation (2)


Acquisition


($ in millions)

Transportation Solutions (3):










Automotive

$              (194)

(6.3)%


$                (79)

(2.6)%


$              (115)


$                    -

Commercial transportation

(12)

(1.9)


11

1.6


(23)


-

Sensors

(3)

(0.7)


10

2.3


(13)


-

Total

(209)

(5.0)


(58)

(1.4)


(151)


-

Industrial Solutions (3):










Industrial equipment

18

1.9


3

0.2


(27)


42

Aerospace, defense, oil, and gas

64

11.6


72

13.1


(8)


-

Energy

(1)

(0.3)


18

5.0


(19)


-

Total

81

4.4


93

5.0


(54)


42

Communications Solutions (3):










Data and devices

12

2.4


22

4.5


(10)


-

Appliances

(23)

(6.0)


(11)

(2.9)


(12)


-

Total

(11)

(1.3)


11

1.3


(22)


-

Total 

$              (139)

(2.0)%


$                 46

0.7%


$              (227)


$                 42











(1) Organic net sales growth 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 29, 2019

(UNAUDITED)
























Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges (1)


Charges, Net (1)


Items (2)


(Non-GAAP) (3)


($ in millions, except per share data)

Operating income:










Transportation Solutions

$               316


$                   4


$                 24


$                    -


$               344

Industrial Solutions

137


5


17


-


159

Communications Solutions

77


-


1


-


78

    Total 

$               530


$                   9


$                 42


$                    -


$               581











Operating margin

15.5%








17.0%











Other income, net

$                   1


$                    -


$                    -


$                    -


$                   1











Income tax expense

$               (91)


$                  (2)


$                (10)


$                 15


$                (88)











Effective tax rate

17.5%








15.4%











Income from continuing operations 

$               429


$                   7


$                 32


$                 15


$               483











Diluted earnings per share from 










   continuing operations

$              1.26


$              0.02


$              0.09


$              0.04


$              1.42











(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 income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions.

(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 March 30, 2018

(UNAUDITED)




















Adjustments








Restructuring






Acquisition


and Other






Related


Charges


Adjusted


U.S. GAAP


Charges (1)


(Credits), Net (1)


(Non-GAAP) (2)


($ in millions, except per share data)

Operating income:








Transportation Solutions

$               427


$                   2


$                  (2)


$               427

Industrial Solutions

125


3


7


135

Communications Solutions

69


-


1


70

    Total 

$               621


$                   5


$                   6


$               632









Operating margin

17.4%






17.7%









Other income, net

$                   1


$                    -


$                    -


$                   1









Income tax expense

$              (108)


$                    -


$                   1


$              (107)









Effective tax rate

18.1%






17.6%









Income from continuing operations 

$               490


$                   5


$                   7


$               502









Diluted earnings per share from 








   continuing operations 

$              1.38


$              0.01


$              0.02


$              1.42









(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 29, 2019

(UNAUDITED)
























Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges (1)


Charges, Net (1)


Items (2)


(Non-GAAP) (3)


($ in millions, except per share data)

Operating income:










Transportation Solutions

$               648


$                   7


$                 45


$                    -


$               700

Industrial Solutions

237


8


52


-


297

Communications Solutions

129


-


20


-


149

    Total 

$            1,014


$                 15


$               117


$                    -


$            1,146











Operating margin

15.0%








17.0%











Income tax expense

$              (169)


$                  (3)


$                (29)


$                 15


$              (186)











Effective tax rate

17.2%








16.7%











Income from continuing operations

$               812


$                 12


$                 88


$                 15


$               927











Diluted earnings per share from 










   continuing operations 

$              2.37


$              0.04


$              0.26


$              0.04


$              2.71











(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 income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions.

(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 30, 2018

(UNAUDITED)
























Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges (1)


Charges, Net (1)


Items (2)


(Non-GAAP) (3)


($ in millions, except per share data)

Operating income:










Transportation Solutions

$               844


$                   7


$                   2


$                    -


$               853

Industrial Solutions

227


5


29


-


261

Communications Solutions

136


-


9


-


145

    Total 

$            1,207


$                 12


$                 40


$                    -


$            1,259











Operating margin

17.5%








18.3%











Other income, net

$                   3


$                    -


$                    -


$                  (1)


$                   2











Income tax expense

$              (707)


$                  (2)


$                  (7)


$               506


$              (210)











Effective tax rate

60.7%








17.3%











Income from continuing operations

$               457


$                 10


$                 33


$               505


$            1,005











Diluted earnings per share from 










   continuing operations 

$              1.29


$              0.03


$              0.09


$              1.42


$              2.83











(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 $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act and a $61 million income tax benefit related to certain legal entity restructurings.

(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 June 29, 2018

(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

$               393


$                   2


$                 11


$               406

Industrial Solutions

92


3


47


142

Communications Solutions

69


-


6


75

    Total 

$               554


$                   5


$                 64


$               623









Operating margin

15.5%






17.4%









Other expense, net

$                  (1)


$                    -


$                    -


$                  (1)









Income tax expense

$                (77)


$                  (2)


$                (20)


$                (99)









Effective tax rate

14.5%






16.5%









Income from continuing operations 

$               453


$                   3


$                 44


$               500









Diluted earnings per share from 








   continuing operations

$              1.29


$              0.01


$              0.13


$              1.42









(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 Year Ended September 28, 2018

(UNAUDITED)
























Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges (1)


Charges, Net (1)


Items (2)


(Non-GAAP) (3)


($ in millions, except per share data)

Operating income:










Transportation Solutions

$            1,578


$                 12


$                 33


$                    -


$            1,623

Industrial Solutions

465


10


80


-


555

Communications Solutions

288


-


13


-


301

    Total 

$            2,331


$                 22


$               126


$                    -


$            2,479











Operating margin

16.7%








17.7%











Other income, net

$                   1


$                    -


$                    -


$                  (1)


$                    -











Income tax (expense) benefit

$               344


$                  (5)


$                (31)


$              (716)


$              (408)











Effective tax rate

(15.4)%








17.1%











Income from continuing operations 

$            2,584


$                 17


$                 95


$              (717)


$            1,979











Diluted earnings per share from 










   continuing operations

$              7.32


$              0.05


$              0.27


$             (2.03)


$              5.61











(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 $1,283 million net income tax benefit associated with the tax impacts of certain intercompany transactions and legal entity restructurings including an increase to the valuation allowance. Also includes $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act.

(3) 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 24, 2019

(UNAUDITED)






Outlook for




Quarter Ending




June 28,


 Outlook for 


2019


Fiscal 2019

Diluted earnings per share from continuing operations (GAAP)

 $1.13 - $1.17 


 $4.88 - $4.98 

Restructuring and other charges, net

0.26


0.55

Acquisition related charges

0.02


0.08

Tax items

-


0.04

Adjusted diluted earnings per share from continuing operations (non-GAAP) (1)

 $1.41 - $1.45 


 $5.55 - $5.65 









Net sales growth (GAAP)

(5)% - (2)%


(3)% - (1)%

Translation

3


3

(Acquisitions) divestitures, net

-


(1)

Organic net sales growth (non-GAAP) (1)

(2)% - 1%


(1)% - 1%









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


 

Cision

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