TE Connectivity

First Quarter

2021 Earnings

January 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

Q1 Results exceeded guidance with double digit growth in Sales and EPS

  • Sales of $3.5B, up 11% on a reported basis and 6% organically Y/Y
    • Transportation up 12% organically Y/Y, with growth in all businesses
    • Industrial down 8% organically Y/Y, driven by weakness in Comm Air
    • Communications up 12% organically Y/Y, with growth in Appliances and Data & Devices
  • Orders of ~$4B, up 25% Y/Y. Book to bill of 1.15
  • Adjusted Operating Margins of 17.7%, up ~190bps Y/Y
  • Adjusted EPS of $1.47, up 21% Y/Y driven by strong operational performance
  • Record Q1 Free Cash Flow of ~$530M with ~$285M returned to shareholders
  • Continuing to demonstrate the strength of our portfolio and content benefit from secular trends

Q2 Guidance reflects double digit Sales and Adjusted EPS growth Y/Y

  • Expect sales of ~$3.5B, up ~10% reported and mid-single digits organically Y/Y
    • Y/Y increases in Transportation and Communications, partially offset by declines in Industrial
  • Adjusted EPS of ~$1.47, up 14% Y/Y with Adjusted Operating Margin expansion

3

Organic Net Sales Growth (Decline), Adjusted EPS, Adjusted Operating Margin and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations

Segment Orders Summary

($ in millions)

Reported

FY20

FY20

FY21

Q1 Growth

Q1

Q4

Q1

Y/Y

Q/Q

Transportation

1,867

2,124

2,537

36%

19%

Industrial

965

799

956

(1%)

20%

Communications

409

425

556

36%

31%

Total TE

3,241

3,348

4,049

25%

21%

Book to Bill

1.02

1.03

1.15

  • Transportation Y/Y growth driven by all businesses and regions
  • Industrial Y/Y decline driven by Comm Air weakness partially offset by increases in Industrial Equipment and Energy
  • Communications Y/Y growth driven by Appliances and Data & Devices increases in all regions
  • Sequential orders growth across all businesses in each Segment

Orders Reflecting Benefit of Market Improvements

4

Transportation Solutions

$ in Millions

Q1 Sales

Reported

Up 19%

$2,224

Organic

$1,868

Up 12%

Q1 2020

Q1 2021

Q1 Adjusted Operating Margin

Adjusted Operating

Margin expansion

17.4%

19.4%

driven by strong

operational

performance

Q1 2020

Q1 2021

Adjusted EBITDA Margin

23.4%

24.9%

Q1 Business Performance

Y/Y Growth Rates

Reported

Organic

Automotive

$1,629

16%

11%

Commercial

331

28%

25%

Transportation

Sensors

264

29%

3%

Transportation

$2,224

19%

12%

Solutions

  • Automotive organic sales growth of 11%, versus low- single digit global production growth, driven by continued strong content outperformance and supply chain benefits
  • Commercial Transportation organic growth driven by electronification trends and content outperformance
  • Sensors reported growth of 29% includes the First Sensor acquisition; organic growth driven by Auto applications

5

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

Industrial Solutions

$ in Millions

Q1 Sales

Reported

Down 6%

Organic

$927

$873

Down 8%

Q1 2020

Q1 2021

Q1 Adjusted Operating Margin

Adjusted Operating

Margin performance

14.2%

13.5%

remains resilient

despite lower sales

Q1 2020

Q1 2021

Adjusted EBITDA Margin

19.1%

18.9%

Q1 Business Performance

Y/Y Growth Rates

Reported

Organic

Aerospace, Defense

$250

(19)%

(22)%

and Marine

Industrial Equipment

295

12%

8%

Medical

156

(13)%

(13)%

Energy

172

(2)%

(4)%

Industrial Solutions

$873

(6)%

(8)%

  • AD&M decline driven by continued weakness in Commercial Aerospace market
  • Industrial Equipment growth in all regions with strength in factory automation applications
  • Medical impacted by ongoing delays in elective procedures caused by Covid-19
  • Energy driven by Covid-19 impacts on the utility market, partially offset by gains in renewable energy applications

6

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

Communications Solutions

$ in Millions

Q1 Sales

Reported

Up 14%

Organic

$425

$373

Up 12%

Q1 2020

Q1 2021

Q1 Adjusted Operating Margin

Q1 Business Performance

Y/Y Growth Rates

Reported

Organic

Data & Devices

$234

7%

5%

Appliances

$191

24%

21%

Communications

$425

14%

12%

Solutions

  • Data & Devices growth driven by market strength and share gains in high-speed cloud related applications

Adjusted Operating

Margin performance

17.6%

driven by strong

12.1%

operational

performance

Q1 2020

Q1 2021

Adjusted EBITDA Margin

16.4%

21.6%

  • Appliances growth across all regions, benefitting from home investments and improving housing market

7

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

Q1 Financial Summary

($ in Millions, except per share amounts)

Q1 FY20

Q1 FY21

Net Sales

$

3,168

$

3,522

Operating Income

$

471

$

448

Operating Margin

14.9%

12.7%

Acquisition-Related Charges

7

9

Restructuring & Other Charges, Net

24

167

Adjusted Operating Income

$

502

$

624

Adjusted Operating Margin

15.8%

17.7%

Earnings Per Share*

$

0.07

$

1.13

Acquisition-Related Charges

0.02

0.02

Restructuring & Other Charges, Net

0.07

0.41

Tax Items

1.05

(0.09)

Adjusted EPS

$

1.21

$

1.47

8

* Represents Diluted Earnings (Loss) Per Share from Continuing Operations.

Adjusted Operating Income, Adjusted Operating Margin and Adjusted EPS are non-GAAP financial measures; see Appendix for descriptions and reconciliations.

Q1 Financial Performance

Sales

$3,168

$3,261

$3,522

Q1 2020

Q4 2020

Q1 2021

Adjusted EPS

$1.21

$1.16

$1.47

Q1 2020

Q4 2020

Q1 2021

Adjusted Operating Margin

15.8%

14.5%

17.7%

Q1 2020

Q4 2020

Q1 2021

Adjusted

EBITDA 21.3% 20.1% 23.0%

Margin

Free Cash Flow

$648

$529

$243

Q1 2020

Q4 2020

Q1 2021

Demonstrating Business Model Execution

9

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

Additional Information

EVERY CONNECTION COUNTS

Y/Y Q1 2021

Sales

Adjusted EPS

(in millions)

Q1 2020 Results

$3,168

$1.21

Operational Performance

248

0.23

FX Impact

106

0.06

Tax Rate Impact

-

(0.03)

Q1 2021 Results

$3,522

$1.47

11

Adjusted EPS is a non-GAAP financial measure; See Appendix for description and reconciliation.

Y/Y Q2 2021

Sales

Adjusted EPS

(in millions)

Q2 2020 Results

$3,195

$1.29

Operational Performance

138

0.12

FX Impact

167

0.09

Tax Rate Impact

-

(0.03)

Q2 2021 Guidance

$3,500

$1.47

12

Adjusted EPS is a non-GAAP financial measure; See Appendix for description and reconciliation.

Q1 Balance Sheet & Cash Flow Summary

Free Cash Flow and Working Capital

Liquidity, Cash & Debt

($ in Millions)

Cash from Continuing Operating Activities

Capital expenditures, net

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

Q1 2020

Q1 2021

$411 $640

  1. (141)
    6 30

($ in Millions)

Q1 2020 Q1 2021

Beginning Cash Balance

$927

$945

Free Cash Flow

243

529

Dividends

(154)

(159)

Share repurchases

(139)

(119)

Net decrease in debt

(9)

(30)

Acquisition of businesses, net of cash

acquired

(115)

(107)

Free Cash Flow

$243

$529

A/R

$2,338

$2,640

Days Sales Outstanding*

66

67

Inventory

$2,003

$2,066

Days on Hand*

81

75

Accounts Payable

$1,433

$1,629

Days Outstanding*

60

62

Other

(11)

39

Ending Cash Balance

$742

$1,098

Total Debt

$3,973

$4,201

13

Free Cash Flow is a non-GAAP financial measure, see Appendix for description and reconciliation

* Adjusted to exclude the impact of acquisitions

Appendix

EVERY CONNECTION COUNTS

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.

15

Non-GAAP Financial Measures (cont.)

  • Adjusted EBITDA and Adjusted EBITDA Margin - represent net income (loss) and net income (loss) as a percentage of net sales, respectively, (the most comparable GAAP financial measures) before interest expense, interest income, income taxes, depreciation, and amortization, as adjusted for net other income, income from discontinued operations, and special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if any.
  • 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.
  • Free Cash Flow Conversion - represents the ratio of Free Cash Flow to Adjusted Income (Loss) from Continuing Operations. We use Free Cash Flow Conversion as an indicator of our ability to convert earnings to cash.

16

Segment Summary

For the Quarters Ended

December 25,

December 27,

2020

2019

($

in millions)

Net Sales

Net Sales

Transportation Solutions

$

2,224

$

1,868

Industrial Solutions

873

927

Communications Solutions

425

373

Total

$

3,522

$

3,168

Operating

Operating

Operating

Operating

Income

Margin

Income

Margin

Transportation Solutions

$

316

16.9

%

$

308

13.8

%

Industrial Solutions

76

8.7

115

12.4

Communications Solutions

64

15.1

40

10.7

Total

$

448

12.7

%

$

471

14.9

%

Adjusted

Adjusted

Adjusted

Adjusted

Operating

Operating

Operating

Operating

Income (1)

Margin (1)

Income (1)

Margin (1)

Transportation Solutions

19.4

%

$

325

17.4

%

$

431

Industrial Solutions

118

13.5

132

14.2

Communications Solutions

75

17.6

45

12.1

Total

624

17.7

%

502

15.8

%

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

17

Reconciliation of Net Sales Growth

Change in Net Sales for the Quarter Ended December 25, 2020

versus Net Sales for the Quarter Ended December 27, 2019

Net Sales

Organic Net Sales

Growth (Decline)

Growth (Decline) (1)

Translation (2)

Acquisitions

Transportation Solutions (3):

($ in millions)

Automotive

$

224

15.9

%

$

161

11.3

%

$

63

$

-

Commercial transportation

73

28.3

65

24.9

8

-

Sensors

59

28.8

7

3.2

5

47

Total

356

19.1

233

12.3

76

47

Industrial Solutions (3):

Aerospace, defense, oil, and gas

(59)

(19.1)

(68)

(22.0)

6

3

Industrial equipment

32

12.2

21

7.7

11

-

Medical

(23)

(12.8)

(24)

(13.4)

1

-

Energy

(4)

(2.3)

(7)

(3.7)

3

-

Total

(54)

(5.8)

(78)

(8.4)

21

3

Communications Solutions (3):

Data and devices

15

6.8

10

4.7

5

-

Appliances

37

24.0

33

21.1

4

-

Total

52

13.9

43

11.5

9

-

Total

$

354

11.2

%

$

198

6.2

%

$

106

$

50

  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.

18

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 25, 2020

Operating income: Transportation Solutions Industrial Solutions Communications Solutions

Total

Operating margin

Other expense, net

Income tax expense

Effective tax rate

Income from continuing operations

Diluted earnings per share from continuing operations

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)

$

308

$

5

$

118

$

-

$

431

76

4

38

-

118

64

-

11

-

75

$

448

$

9

$

167

$

-

$

624

12.7

%

17.7

%

$

(1)

$

-

$

-

$

-

$

(1)

$

(60)

$

(2)

$

(32)

$

(29)

$

(123)

13.8

%

20.1

%

$

375

$

7

$

135

$

(29)

$

488

$

1.13

$

0.02

$

0.41

$

(0.09)

$

1.47

  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.

19

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 27, 2019

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

$

316

$

5

$

4

$

-

$

325

Industrial Solutions

115

2

15

-

132

Communications Solutions

40

-

5

-

45

Total

$

471

$

7

$

24

$

-

$

502

Operating margin

14.9

%

15.8

%

Other income, net

$

5

$

-

$

-

$

-

$

5

Income tax expense

$

(447)

$

(1)

$

-

$

355

$

(93)

Effective tax rate

95.1

%

18.6

%

Income from continuing operations

$

23

$

6

$

24

$

355

$

408

Diluted earnings per share from

continuing operations

$

0.07

$

0.02

$

0.07

$

1.05

$

1.21

  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 the tax impacts of certain measures of Swiss tax reform.
  3. See description of non-GAAP financial measures.

20

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 25, 2020

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.

21

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 27, 2020

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

$

(606)

$

10

$

18

$

900

$

-

$

322

Industrial Solutions

142

2

1

-

-

145

Communications Solutions

49

-

3

-

-

52

Total

$

900

$

-

$

519

$

(415)

$

12

$

22

Operating margin

(13.0)

%

16.2

%

Other income, net

$

11

$

-

$

-

$

-

$

(8)

$

3

Income tax expense

$

(42)

$

(2)

$

(4)

$

(4)

$

(31)

$

(83)

Effective tax rate

(10.2)

%

16.1

%

Income (loss) from continuing

operations

$

(452)

$

10

$

18

$

896

$

(39)

$

433

Diluted earnings (loss) per share from

continuing operations (3)

$

(1.35)

$

0.03

$

0.05

$

2.67

$

(0.12)

$

1.29

  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 an income tax benefit related to pre-separation tax matters and the termination of the tax sharing agreement with Tyco International and Covidien, as well as the related impact to net other income.
  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.

22

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 25, 2020

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.

23

Reconciliation of Free Cash Flow

For the Quarters Ended

December 25,

September 25,

December 27,

2020

2020

2019

Net cash provided by operating activities:

(in millions)

Net cash provided by continuing operating activities

$

640

$

719

$

411

Net cash provided by discontinued operating activities

-

1

-

640

720

411

Net cash used in investing activities

(246)

(117)

(289)

Net cash used in financing activities

(252)

(135)

(314)

Effect of currency translation on cash

11

3

7

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

$

153

$

471

$

(185)

Net cash provided by continuing operating activities

$

640

$

719

$

411

Excluding:

Cash paid pursuant to collateral requirements related

6

to cross-currency swap contracts

30

39

Capital expenditures, net

(141)

(110)

(174)

Free cash flow(1)

$

529

$

648

$

243

(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.

24

Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin

For the Quarters Ended

December 25,

September 25,

December 27,

2020

2020

2019

($

in millions)

Net income

$

381

$

230

$

26

Income from discontinued operations

(6)

(2)

(3)

Income tax expense

60

109

447

Other (income) expense, net

1

-

(5)

Interest expense

15

12

12

Interest income

(3)

(2)

(6)

Operating income

448

347

471

Acquisition-related charges

9

13

7

Restructuring and other charges, net

167

113

24

Adjusted operating income (1)

624

473

502

Depreciation and amortization

187

181

174

Adjusted EBITDA (1)

$

811

$

654

$

676

Net sales

$

3,522

$

3,261

$

3,168

Net income as a percentage of net sales

10.8

%

7.1

%

0.8

%

Adjusted EBITDA margin (1)

23.0

%

20.1

%

21.3

%

For the Quarters Ended

December 25, 2020

December 27, 2019

Transportation

Industrial

Communications

Transportation

Industrial

Communications

Solutions

Solutions

Solutions

Total

Solutions

Solutions

Solutions

Total

Operating income

($ in millions)

$

308

$

76

$

64

$

448

$

316

$

115

$

40

$

471

Acquisition-related charges

5

4

-

9

5

2

-

7

Restructuring and other charges, net

118

38

11

167

4

15

5

24

Adjusted operating income (1)

431

118

75

624

325

132

45

502

Depreciation and amortization

123

47

17

187

113

45

16

174

Adjusted EBITDA (1)

$

554

$

165

$

92

$

811

$

438

$

177

$

61

$

676

Net sales

$

2,224

$

873

$

425

$

3,522

$

1,868

$

927

$

373

$

3,168

Operating margin

13.8

%

8.7

%

15.1

%

12.7

%

16.9

%

12.4

%

10.7

%

14.9

%

Adjusted operating margin (1)

19.4

%

13.5

%

17.6

%

17.7

%

17.4

%

14.2

%

12.1

%

15.8

%

Adjusted EBITDA margin (1)

24.9

%

18.9

%

21.6

%

23.0

%

23.4

%

19.1

%

16.4

%

21.3

%

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

25

Reconciliation of Forward-LookingNon-GAAP Financial Measures to Forward-Looking GAAP Financial Measures

Diluted earnings per share from continuing operations Restructuring and other charges, net Acquisition-related charges

Adjusted diluted earnings per share from continuing operations (2)

Outlook for

Quarter Ending

March 26, 2021 (1)

$ 1.38 0.07 0.02

$ 1.47

Outlook for Fiscal 2021 (1)

Effective tax rate

17.5

%

Effective tax rate adjustments (3)

1.5

Adjusted effective tax rate (2)

19.0

%

  1. Outlook is as of January 27, 2021.
  2. See description of non-GAAP financial measures.
  3. Includes adjustments for special tax items and the tax effect of acquisition-related charges and net restructuring and other charges, calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.

26

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TE Connectivity Ltd. published this content on 27 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 January 2021 15:13:07 UTC