TE CONNECTIVITY LTD.

(TEL)
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Q4 2021 TE Connectivity Ltd. Earnings Conference Call

10/27/2021 | 06:18am EDT

TE Connectivity

Fourth Quarter

2021 Earnings

October 27, 2021

EVERY CONNECTION COUNTS

Forward-Looking Statements

and Non-GAAP Financial Measures

Forward-Looking Statements

This presentation 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 presentation 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.

Non-GAAP Financial Measures

Where we have used non-GAAP financial measures, reconciliations to the most comparable GAAP measure are provided, along with a disclosure on the usefulness of the non-GAAP financial measure, in this presentation.

2

Earnings Highlights

Strong Q4 Sales & Adjusted EPS above expectations despite broader supply challenges

  • Sales of $3.8B, up 17% Y/Y; Adjusted EPS of $1.69, up 46% Y/Y
  • Strong order levels of $4.1B; book to bill of 1.08
  • Adjusted Operating Margins of 18.5%, with strong operational performance in all segments
  • Generated Free Cash Flow of ~$535M; ~$475M returned to shareholders and ~$300M for M&A

FY21 results demonstrate strong execution & strength and diversity of our portfolio

  • Sales of $14.9B, up 23% Y/Y, with benefits from secular trends across our business, including EV, data centers, & factory automation
  • Adjusted Operating Margins of 18.1%, up ~400bps Y/Y, with expansion in each segment
  • Adjusted EPS of $6.51, up over 50% Y/Y, driven by strong operational performance
  • Free Cash Flow ~$2.1B with ~100% conversion and 75% returned to shareholders & 20% for M&A
  • Continue to drive ESG initiatives while enabling sustainable applications for our customers

Q1 Guidance

  • Expect sales of ~$3.7B, up 5% reported Y/Y and Adjusted EPS of ~$1.60, up 9% Y/Y
  • Expect continued strong performance despite auto production declines in Q1

3

Adjusted EPS, Adjusted Operating Margin , Free Cash Flow, and Free Cash Flow Conversion are non-GAAP financial measures; see Appendix for descriptions and reconciliations

Segment Orders Summary

($ in millions)

Reported

FY20

FY21

FY21

Q4 Growth

Q4

Q3

Q4

Y/Y

Q/Q

Transportation

2,124

2,562

2,349

11%

(8)%

Industrial

799

1,218

1,140

43%

(6)%

Communications

425

755

647

52%

(14)%

Total TE

3,348

4,535

4,136

24%

(9)%

Book to Bill

1.03

1.18

1.08

  • Y/Y orders growth in all segments and regions
  • Book to bill remains strong in each segment
  • Order patterns as expected, with strong backlog position entering FY22

Strong Orders Growth Y/Y with 1.08 Book to Bill

4

Transportation Solutions

$ in Millions

Q4 Sales

Reported

Up 18%

$2,198

Organic

$1,865

Up 16%

Q4 2020

Q4 2021

Q4 Adjusted Operating Margin

Margin expansion

driven by higher

18.0%

volume and strong

13.1%

operational

performance

Q4 2020

Q4 2021

Adjusted EBITDA Margin

19.6%

23.2%

Q4 Business Performance

Y/Y Growth Rates

Reported

Organic

Automotive

$1,520

14%

12%

Commercial

372

40%

38%

Transportation

Sensors

306

16%

15%

Transportation

$2,198

18%

16%

Solutions

  • Automotive growth despite production declines. Continue to benefit from content trends of electronification and electric vehicle adoption
  • Commercial Transportation strong market outperformance with growth across all regions and market verticals
  • Sensors growth primarily driven by transportation applications, with new program ramps

5

Organic Net Sales Growth (Decline), Adjusted Operating Margin and Adjusted EBITDA Margin are non-GAAP financial measures: see Appendix for descriptions and reconciliations

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

TE Connectivity Ltd. published this content on 27 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 October 2021 10:17:03 UTC.


© Publicnow 2021
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Financials (USD)
Sales 2022 15 795 M - -
Net income 2022 2 244 M - -
Net Debt 2022 2 817 M - -
P/E ratio 2022 18,9x
Yield 2022 1,57%
Capitalization 41 802 M 41 802 M -
EV / Sales 2022 2,82x
EV / Sales 2023 2,60x
Nbr of Employees 89 000
Free-Float 94,9%
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Managers and Directors
Terrence R. Curtin Executive VP & President-Industrial Solutions
Heath A. Mitts Chief Financial Officer, Director & Executive VP
Thomas J. Lynch Chairman
Joseph F. Eckroth Chief Information Officer & Senior Vice President
Phil Gilchrist Chief Technology Officer & Vice President
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