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TE Connectivity announces third quarter results for fiscal year 2021

July 28, 2021
Record sales and strong performance across all segments; EPS exceed company expectations

SCHAFFHAUSEN, Switzerland, July 28, 2021 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal third quarter ended June 25, 2021.

Third Quarter Highlights

  • Net sales were a record $3.8 billion, up 51% on a reported basis, and 45% on an organic basis year over year.
  • Orders of $4.5 billion, consistent with second quarter order levels.
  • GAAP diluted earnings per share (EPS) from continuing operations were $1.74, and adjusted EPS were $1.79, up significantly year over year and a record for the company.
  • Cash flow from operating activities was $682 million and free cash flow was $539 million, with $447 million returned to shareholders.

"The global strength and diversity of our portfolio, combined with our global manufacturing strategy, positioned us to deliver record results despite broader supply chain challenges.  We are continuing to benefit from the growth trends we have strategically positioned TE to capitalize on, as all three of our business segments – Transportation, Industrial and Communications - delivered strong operating performance, both year over year and sequentially," said TE Connectivity CEO Terrence Curtin. "I am very pleased with our results as well as our team's ability to deliver record sales growth and earnings that exceeded our expectations. We expect strong performance to continue into the fourth quarter with double digit sales growth and significant EPS growth year over year as we continue to benefit from a recovering economic backdrop, content growth and our leadership positions in long-term technology trends." 

Fourth Quarter Outlook

For the fourth quarter of fiscal 2021, the company expects net sales of approximately $3.8 billion, compared to $3.26 billion in the prior year. GAAP diluted EPS from continuing operations are expected to be approximately $1.55, compared to $0.69 in the prior year.  Adjusted EPS are expected to be approximately $1.65, compared to adjusted EPS of $1.16 in the prior year.  

For the full year, the company expects net sales of $14.9 billion, up approximately 22% year over year. GAAP diluted EPS from continuing operations are expected to be $5.94, including net restructuring, acquisition-related and other charges of $0.62 and a tax-related benefit of $0.09. The company expects adjusted EPS of $6.47, compared to $4.26 in the prior year, up 52% year over year.

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 (866) 211-4092, and for international callers, the dial-in number is (647) 689-6620.
  • 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 July 28, 2021. 

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 approximately 80,000 employees, including more than 7,500 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 (Loss) and Adjusted Operating Margin – represent operating income (loss) 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 (loss) 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 (Loss) 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 (Loss) from Continuing Operations – represents income (loss) 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 (Loss) Per Share – represents diluted earnings (loss) 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 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, 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; 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. 25, 2020 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 Nine Months Ended


June 25,


June 26,


June 25,


June 26,


2021


2020


2021


2020


(in millions, except per share data)

Net sales

$

3,845


$

2,548


$

11,105


$

8,911

Cost of sales 


2,577



1,841



7,481



6,145

Gross margin


1,268



707



3,624



2,766

Selling, general, and administrative expenses


366



321



1,128



1,040

Research, development, and engineering expenses


168



146



504



465

Acquisition and integration costs


9



8



23



27

Restructuring and other charges, net


11



98



195



144

Impairment of goodwill








900

Operating income


714



134



1,774



190

Interest income


3



2



14



13

Interest expense


(14)



(13)



(42)



(36)

Other income, net


2



4



5



20

Income from continuing operations before income taxes


705



127



1,751



187

Income tax expense


(124)



(185)



(290)



(674)

Income (loss) from continuing operations


581



(58)



1,461



(487)

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


(1)



17



6



16

Net income (loss)

$

580


$

(41)


$

1,467


$

(471)













Basic earnings (loss) per share:












Income (loss) from continuing operations

$

1.76


$

(0.18)


$

4.41


$

(1.46)

Income (loss) from discontinued operations




0.05



0.02



0.05

Net income (loss)


1.76



(0.12)



4.43



(1.41)













Diluted earnings (loss) per share:












Income (loss) from continuing operations

$

1.74


$

(0.18)


$

4.39


$

(1.46)

Income (loss) from discontinued operations




0.05



0.02



0.05

Net income (loss)


1.74



(0.12)



4.41



(1.41)













Weighted-average number of shares outstanding: 












Basic


330



330



331



333

Diluted


333



330



333



333

 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)














June 25,


September 25,


2021


2020


(in millions, except share data)

Assets






Current assets:






Cash and cash equivalents

$

1,416


$

945

Accounts receivable, net of allowance for doubtful accounts of $41 and $29, respectively


2,985



2,377

Inventories


2,392



1,950

Prepaid expenses and other current assets


601



512

Total current assets


7,394



5,784

Property, plant, and equipment, net


3,723



3,650

Goodwill


5,401



5,224

Intangible assets, net


1,516



1,593

Deferred income taxes


2,224



2,178

Other assets


800



813

Total assets

$

21,058


$

19,242

Liabilities, redeemable noncontrolling interests,  and shareholders' equity






Current liabilities:






Short-term debt

$

505


$

694

Accounts payable


1,938



1,276

Accrued and other current liabilities


2,219



1,720

Total current liabilities


4,662



3,690

Long-term debt


3,629



3,452

Long-term pension and postretirement liabilities


1,305



1,336

Deferred income taxes


149



143

Income taxes


299



252

Other liabilities


852



874

Total liabilities


10,896



9,747

Commitments and contingencies






Redeemable noncontrolling interests


116



112

Shareholders' equity:






Common shares, CHF 0.57 par value, 336,099,881 shares authorized and issued, and
338,953,381 shares authorized and issued, respectively


148



149

Accumulated earnings 


10,892



10,348

Treasury shares, at cost, 7,518,936 and 8,295,878 shares, respectively


(778)



(669)

Accumulated other comprehensive loss


(216)



(445)

Total shareholders' equity


10,046



9,383

Total liabilities, redeemable noncontrolling interests, and shareholders' equity

$

21,058


$

19,242

 

TE CONNECTIVITY LTD.

 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


























For the Quarters Ended


For the Nine Months Ended


June 25,


June 26,


June 25,


June 26,


2021


2020


2021


2020


(in millions)

Cash flows from operating activities:












Net income (loss)

$

580


$

(41)


$

1,467


$

(471)

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


1



(17)



(6)



(16)

Income (loss) from continuing operations


581



(58)



1,461



(487)

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












Impairment of goodwill








900

Depreciation and amortization


210



176



590



530

Deferred income taxes


(14)



114



(62)



459

Non-cash lease cost


31



27



90



79

Provision for losses on accounts receivable and inventories


10



10



32



28

Share-based compensation expense


24



17



73



54

Other 


(25)



29



(45)



40

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












Accounts receivable, net


(71)



322



(638)



182

Inventories


(270)



(191)



(482)



(342)

Prepaid expenses and other current assets


16



2



(14)



27

Accounts payable


136



(130)



646



(81)

Accrued and other current liabilities


(15)



(24)



110



(204)

Income taxes


27



19



61



20

Other


42



67



80



67

Net cash provided by operating activities


682



380



1,902



1,272

Cash flows from investing activities:












Capital expenditures


(170)



(130)



(454)



(439)

Proceeds from sale of property, plant, and equipment


27



3



85



6

Acquisition of businesses, net of cash acquired


(19)



31



(126)



(328)

Other


(12)



15



(2)



13

Net cash used in investing activities


(174)



(81)



(497)



(748)

Cash flows from financing activities:












Net decrease in commercial paper








(219)

Proceeds from issuance of debt






661



593

Repayment of debt


(426)



(352)



(706)



(352)

Proceeds from exercise of share options


11



2



130



29

Repurchase of common shares


(259)



(115)



(518)



(523)

Payment of common share dividends to shareholders


(165)



(159)



(483)



(466)

Other


(3)



(1)



(27)



(32)

Net cash used in financing activities


(842)



(625)



(943)



(970)

Effect of currency translation on cash


2



4



9



(7)

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


(332)



(322)



471



(453)

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


1,748



796



945



927

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

$

1,416


$

474


$

1,416


$

474













Supplemental cash flow information:












Interest paid on debt, net

$

7


$

7


$

40


$

31

Income taxes paid, net of refunds


110



51



291



195

 

TE CONNECTIVITY LTD.

RECONCILIATION OF FREE CASH FLOW (UNAUDITED)


























For the Quarters Ended


For the Nine Months Ended


June 25,


June 26,


June 25,


June 26,


2021


2020


2021


2020


(in millions)

Net cash provided by continuing operating activities

$

682


$

380


$

1,902


$

1,272

Excluding:












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




27



12



(5)

Capital expenditures, net


(143)



(127)



(369)



(433)

Free cash flow (1)

$

539


$

280


$

1,545


$

834













(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 Nine Months Ended



June 25,



June 26,



June 25,



June 26,



2021



2020



2021



2020



($ in millions)



Net Sales





Net Sales





Net Sales





Net Sales




Transportation Solutions

$

2,265





$

1,255





$

6,776





$

4,980




Industrial Solutions


1,002






865






2,827






2,754




Communications Solutions


578






428






1,502






1,177




Total

$

3,845





$

2,548





$

11,105





$

8,911





















































Operating


Operating


Operating


Operating


Operating


Operating


Operating


Operating


Income


Margin


Income (Loss)


Margin


Income


Margin


Income (Loss)


Margin

Transportation Solutions

$

433


19.1

%


$

(1)


(0.1)

%


$

1,139


16.8

%


$

(291)


(5.8)

%

Industrial Solutions


148


14.8




70


8.1




335


11.9




327


11.9


Communications Solutions


133


23.0




65


15.2




300


20.0




154


13.1


Total

$

714


18.6

%


$

134


5.3

%


$

1,774


16.0

%


$

190


2.1

%


















































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

$

440


19.4

%


$

60


4.8

%


$

1,284


18.9

%


$

707


14.2

%

Industrial Solutions


158


15.8




112


12.9




395


14.0




389


14.1


Communications Solutions


136


23.5




68


15.9




316


21.0




165


14.0


Total

$

734


19.1

%


$

240


9.4

%


$

1,995


18.0

%


$

1,261


14.2

%

























(1)

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

 

TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (DECLINE) (UNAUDITED)






































Change in Net Sales for the Quarter Ended June 25, 2021


versus Net Sales for the Quarter Ended June 26, 2020


Net Sales



Organic Net Sales





Acquisition/


Growth (Decline)



Growth (Decline) (1)



Translation(2)


(Divestitures)


($ in millions)

Transportation Solutions (3):


















Automotive

$

803


100.8

%


$

738


90.2

%


$

65


$

Commercial transportation


149


63.9




136


56.3




13



Sensors


58


25.8




47


20.3




11



Total


1,010


80.5




921


71.6




89



Industrial Solutions (3):


















Aerospace, defense, oil, and gas


(5)


(1.9)




(18)


(6.9)




8



5

Industrial equipment


112


42.3




96


35.5




16



Medical


17


10.6




16


9.9




1



Energy


13


7.5




15


8.7




8



(10)

Total


137


15.8




109


12.6




33



(5)

Communications Solutions (3):


















Data and devices


53


19.2




46


16.1




7



Appliances


97


63.8




88


56.9




9



Total


150


35.0




134


30.8




16



Total 

$

1,297


50.9

%


$

1,164


45.0

%


$

138


$

(5)
























































Change in Net Sales for the Nine Months Ended June 25, 2021


versus Net Sales for the Nine Months Ended June 26, 2020


Net Sales



Organic Net Sales





Acquisitions/


Growth (Decline)



Growth (Decline) (1)



Translation (2)


(Divestitures)


($ in millions)

Transportation Solutions (3):


















Automotive

$

1,292


36.2

%


$

1,083


29.9

%


$

209


$

Commercial transportation


310


39.5




274


34.3




36



Sensors


194


30.9




81


12.5




24



89

Total


1,796


36.1




1,438


28.4




269



89

Industrial Solutions (3):


















Aerospace, defense, oil, and gas


(115)


(12.9)




(152)


(17.1)




21



16

Industrial equipment


203


25.1




162


19.6




41



Medical


(31)


(5.9)




(33)


(6.3)




2



Energy


16


3.0




15


2.9




20



(19)

Total


73


2.7




(8)


(0.4)




84



(3)

Communications Solutions (3):


















Data and devices


128


18.0




108


15.0




20



Appliances


197


42.5




177


37.7




20



Total


325


27.6




285


24.1




40



Total 

$

2,194


24.6

%


$

1,715


19.0

%


$

393


$

86



(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 June 25, 2021


(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

$

433



$

5


$

2


$

440


Industrial Solutions


148




4



6



158


Communications Solutions


133






3



136


Total 

$

714



$

9


$

11


$

734
















Operating margin


18.6

%









19.1

%















Other income, net

$

2



$


$


$

2
















Income tax expense

$

(124)



$

(2)


$

(4)


$

(130)
















Effective tax rate


17.6

%









17.9

%















Income from continuing operations

$

581



$

7


$

7


$

595
















Diluted earnings per share from continuing operations

$

1.74



$

0.02


$

0.02


$

1.79


















(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 June 26, 2020


(UNAUDITED)









































Adjustments









Acquisition-

Related

Charges (1)


Restructuring

and Other

Charges, Net (1)














Adjusted



U.S. GAAP





Tax Items (2)


(Non-GAAP) (4)



($ in millions, except per share data)


Operating income (loss):

















Transportation Solutions

$

(1)



$

6


$

55


$


$

60


Industrial Solutions


70




2



40





112


Communications Solutions


65






3





68


Total 

$

134



$

8


$

98


$


$

240



















Operating margin


5.3

%












9.4

%


















Other income, net

$

4



$


$


$


$

4



















Income tax expense

$

(185)



$

(1)


$

(21)


$

170


$

(37)



















Effective tax rate


145.7

%












15.9

%


















Income (loss) from continuing operations

$

(58)



$

7


$

77


$

170


$

196



















Diluted earnings (loss) per share from continuing
operations (3)

$

(0.18)



$

0.02


$

0.23


$

0.51


$

0.59





















(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)

Income tax expense related to an increase to the valuation allowance for certain non-U.S. deferred tax assets.

(3)

U.S. GAAP diluted shares excludes one million of nonvested share awards and options outstanding as the inclusion of these securities would have been
antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares.

(4)

See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


For the Nine Months Ended June 25, 2021


(UNAUDITED)









































Adjustments









Acquisition-


Restructuring










Related


and Other




Adjusted



U.S. GAAP



Charges (1)


Charges, Net (1)


Tax Items (2)


(Non-GAAP) (3)



($ in millions, except per share data)


Operating income:

















Transportation Solutions

$

1,139



$

15


$

130


$


$

1,284


Industrial Solutions


335




11



49





395


Communications Solutions


300






16





316


Total 

$

1,774



$

26


$

195


$


$

1,995



















Operating margin


16.0

%












18.0

%


















Other income, net

$

5



$


$


$


$

5



















Income tax expense

$

(290)



$

(6)


$

(38)


$

(29)


$

(363)



















Effective tax rate


16.6

%












18.4

%


















Income from continuing operations

$

1,461



$

20


$

157


$

(29)


$

1,609



















Diluted earnings per share from continuing operations

$

4.39



$

0.06


$

0.47


$

(0.09)


$

4.83























(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)

Income tax benefits related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets.

(3)

See description of non-GAAP financial measures.





TE CONNECTIVITY LTD.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


For the Nine Months Ended June 26, 2020


(UNAUDITED)















































Adjustments









Acquisition-


Restructuring












Related


and Other


Impairment




Adjusted



U.S. GAAP



Charges (1)


Charges, Net (1)


of Goodwill (1)


Tax Items (2)


(Non-GAAP) (4)



($ in millions, except per share data)


Operating income (loss):




















Transportation Solutions

$

(291)



$

21


$

77


$

900


$


$

707


Industrial Solutions


327




6



56







389


Communications Solutions


154






11







165


Total 

$

190



$

27


$

144


$

900


$


$

1,261






















Operating margin


2.1

%















14.2

%





















Other income, net

$

20



$


$


$


$

(8)


$

12






















Income tax expense

$

(674)



$

(4)


$

(25)


$

(4)


$

494


$

(213)






















Effective tax rate


360.4

%















17.0

%





















Income (loss) from continuing

operations

$

(487)



$

23


$

119


$

896


$

486


$

1,037






















Diluted earnings (loss) per share from
continuing operations (3)

$

(1.46)



$

0.07


$

0.36


$

2.68


$

1.46


$

3.10






























(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 $355 million of income tax expense related to the tax impacts of certain measures of Swiss tax reform and $170 million of income tax expense related to an increase to the valuation allowance for certain non-U.S. deferred tax assets, partially offset by a $31 million income tax benefit related to pre-separation tax matters and the termination of the tax sharing agreement with Tyco International and Covidien.

(3)

U.S. GAAP diluted shares excludes one million of nonvested share awards and options outstanding as the inclusion of these securities would have been
antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares.

(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 September 25, 2020


(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

$

198



$

11


$

36


$


$

245


Industrial Solutions


85




2



46





133


Communications Solutions


64






31





95


Total 

$

347



$

13


$

113


$


$

473



















Operating margin


10.6

%












14.5

%


















Income tax expense

$

(109)



$

(4)


$

(21)


$

56


$

(78)



















Effective tax rate


32.3

%












16.8

%


















Income from continuing operations

$

228



$

9


$

92


$

56


$

385



















Diluted earnings per share from continuing operations

$

0.69



$

0.03


$

0.28


$

0.17


$

1.16























(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)

Income tax expense related to increases to the valuation allowance for certain deferred tax assets.

(3)

See description of non-GAAP financial measures.

 

TE CONNECTIVITY LTD.


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES


For the Year Ended September 25, 2020


(UNAUDITED)















































Adjustments









Acquisition-


Restructuring












Related


and Other


Impairment




Adjusted



U.S. GAAP



Charges (1)


Charges, Net (1)


of Goodwill (1)


Tax Items (2)


(Non-GAAP) (4)



($ in millions, except per share data)


Operating income (loss):




















Transportation Solutions

$

(93)



$

32


$

113


$

900


$


$

952


Industrial Solutions


412




8



102







522


Communications Solutions


218






42







260


Total 

$

537



$

40


$

257


$

900


$


$

1,734






















Operating margin


4.4

%















14.2

%





















Other income, net

$

20



$


$


$


$

(8)


$

12






















Income tax expense

$

(783)



$

(8)


$

(46)


$

(4)


$

550


$

(291)






















Effective tax rate


149.4

%















17.0

%





















Income (loss) from continuing
operations

$

(259)



$

32


$

211


$

896


$

542


$

1,422






















Diluted earnings (loss) per share from
continuing operations (3)

$

(0.78)



$

0.10


$

0.63


$

2.68


$

1.62


$

4.26


























(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 $355 million of income tax expense related to the tax impacts of certain measures of Swiss tax reform and $226 million of income tax expense related to increases to the valuation allowance for certain deferred tax assets, partially offset by a $31 million income tax benefit related to pre-separation tax matters and the termination of the tax sharing agreement with Tyco International and Covidien.

(3)

U.S. GAAP diluted shares excludes two million of nonvested share awards and options outstanding as the inclusion of these securities would have been
antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares.

(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 July 28, 2021


(UNAUDITED)









Outlook for






Quarter Ending






September 24,



 Outlook for 



2021



Fiscal 2021


Diluted earnings per share from continuing operations

$

1.55



$

5.94


Restructuring and other charges, net


0.08




0.54


Acquisition-related charges


0.02




0.08


Tax items





(0.09)


Adjusted diluted earnings per share from continuing operations (1)

$

1.65



$

6.47


















Net sales growth


16.5

%



22.4

%

Translation


(2.5)




(2.6)


(Acquisitions) divestitures, net


0.2




(2.0)


Organic net sales growth (1)


14.2

%



17.8

%











(1)

See description of non-GAAP financial measures.

 

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SOURCE TE Connectivity Ltd.