TE Connectivity announces results for first quarter of fiscal year 2019
Sales and earnings for the quarter were in line with the company's guidance
Jan 23, 2019
SCHAFFHAUSEN, Switzerland, Jan. 23, 2019 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal first quarter, which ended December 28, 2018.
First Quarter Highlights
- Net sales were $3.35 billion, flat as reported, and up 2 percent organically from the first quarter of 2018
- Diluted earnings per share (EPS) from continuing operations were $1.11, and adjusted EPS were $1.29
- Cash flow from continuing operating activities was $328 million and free cash flow was $69 million, with $645 million returned to shareholders, including proceeds from the sale of the company's Subsea Communications business
- Orders were $3.3 billion in the quarter, down 6% year-over-year and 4% lower than the prior quarter
First Quarter Results
For the first quarter, the company reported net sales of $3.35 billion, with diluted EPS from continuing operations of $1.11, and adjusted EPS were $1.29, in line with the company's guidance. Cash flow from continuing operating activities was $328 million and free cash flow was $69 million. Total orders were $3.3 billion, below the company's expectations, and the book-to-bill ratio was 0.99.
"First quarter results were in line with our guidance and demonstrated resiliency in what turned out to be a slower demand environment than we expected, due primarily to weakness in China markets. Our Industrial and Communications segments showed solid sales growth, while our Transportation segment outperformed a weak global auto production environment through strong content growth," said Terrence Curtin, Chief Executive Officer of TE Connectivity. "Due to a slower market environment, we are updating our guidance for the remainder of the fiscal year, accelerating several levers in our business model to sustain resilience, and investing for long-term growth in alignment with our strategy."
2019 Outlook
For the fiscal second quarter of 2019, the company expects net sales of $3.3 billion to $3.4 billion. Diluted EPS from continuing operations are expected to be $1.13 to $1.17, including net restructuring, acquisition-related and other charges of $0.12. The company expects adjusted EPS of $1.25 to $1.29.
For the full year, the company expects net sales of $13.45 billion to $13.85 billion. Diluted EPS from continuing operations are expected to be $4.94 to $5.14, including net restructuring, acquisition-related and other charges of $0.41. The company expects adjusted EPS of $5.35 to $5.55.
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) 230-1059, and for international callers, the dial-in number is (612) 234-9960.
- An audio replay of the conference call will be available beginning at 10:30 a.m. ET on January 23, 2019 and ending at 11:59 p.m. ET on January 30, 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 458594.
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 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 – 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 | |||
December 28, | December 29, | ||
2018 | 2017 | ||
(in millions, except per share data) | |||
Net sales | $ 3,347 | $ 3,336 | |
Cost of sales | 2,233 | 2,172 | |
Gross margin | 1,114 | 1,164 | |
Selling, general, and administrative expenses | 389 | 377 | |
Research, development, and engineering expenses | 161 | 165 | |
Acquisition and integration costs | 5 | 2 | |
Restructuring and other charges, net | 75 | 34 | |
Operating income | 484 | 586 | |
Interest income | 5 | 4 | |
Interest expense | (27) | (26) | |
Other income (expense), net | (1) | 2 | |
Income from continuing operations before income taxes | 461 | 566 | |
Income tax expense | (78) | (599) | |
Income (loss) from continuing operations | 383 | (33) | |
Loss from discontinued operations, net of income taxes | (107) | (7) | |
Net income (loss) | $ 276 | $ (40) | |
Basic earnings (loss) per share: | |||
Income (loss) from continuing operations | $ 1.12 | $ (0.09) | |
Loss from discontinued operations | (0.31) | (0.02) | |
Net income (loss) | 0.81 | (0.11) | |
Diluted earnings (loss) per share: | |||
Income (loss) from continuing operations | $ 1.11 | $ (0.09) | |
Loss from discontinued operations | (0.31) | (0.02) | |
Net income (loss) | 0.80 | (0.11) | |
Weighted-average number of shares outstanding: | |||
Basic | 342 | 352 | |
Diluted | 344 | 352 | |
TE CONNECTIVITY LTD. | |||
CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||
December 28, | September 28, | ||
2018 | 2018 | ||
(in millions, except share data) | |||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 505 | $ 848 | |
Accounts receivable, net of allowance for doubtful accounts of $26 and $22, respectively | 2,380 | 2,361 | |
Inventories | 1,986 | 1,857 | |
Prepaid expenses and other current assets | 507 | 661 | |
Current assets held for sale | - | 472 | |
Total current assets | 5,378 | 6,199 | |
Property, plant, and equipment, net | 3,550 | 3,497 | |
Goodwill | 5,648 | 5,684 | |
Intangible assets, net | 1,648 | 1,704 | |
Deferred income taxes | 2,580 | 2,144 | |
Other assets | 384 | 1,158 | |
Total Assets | $ 19,188 | $ 20,386 | |
Liabilities and Shareholders' Equity | |||
Current liabilities: | |||
Short-term debt | $ 585 | $ 963 | |
Accounts payable | 1,538 | 1,548 | |
Accrued and other current liabilities | 1,348 | 1,711 | |
Current liabilities held for sale | - | 188 | |
Total current liabilities | 3,471 | 4,410 | |
Long-term debt | 3,382 | 3,037 | |
Long-term pension and postretirement liabilities | 1,101 | 1,102 | |
Deferred income taxes | 207 | 207 | |
Income taxes | 335 | 312 | |
Other liabilities | 456 | 487 | |
Total Liabilities | 8,952 | 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 | 11,886 | 12,114 | |
Treasury shares, at cost, 17,727,608 and 12,279,603 shares, respectively | (1,550) | (1,134) | |
Accumulated other comprehensive loss | (257) | (306) | |
Total Shareholders' Equity | 10,236 | 10,831 | |
Total Liabilities and Shareholders' Equity | $ 19,188 | $ 20,386 | |
TE CONNECTIVITY LTD. | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||
For the Quarters Ended | |||
December 28, | December 29, | ||
2018 | 2017 | ||
(in millions) | |||
Cash Flows From Operating Activities: | |||
Net income (loss) | $ 276 | $ (40) | |
Loss from discontinued operations, net of income taxes | 107 | 7 | |
Income (loss) from continuing operations | 383 | (33) | |
Adjustments to reconcile income (loss) from continuing operations to net cash | |||
provided by operating activities: | |||
Depreciation and amortization | 168 | 162 | |
Deferred income taxes | (11) | 510 | |
Provision for losses on accounts receivable and inventories | 23 | 17 | |
Share-based compensation expense | 23 | 28 | |
Other | 18 | (6) | |
Changes in assets and liabilities, net of the effects of acquisitions | |||
and divestitures: | |||
Accounts receivable, net | (26) | (139) | |
Inventories | (119) | (177) | |
Prepaid expenses and other current assets | 67 | (45) | |
Accounts payable | (9) | 161 | |
Accrued and other current liabilities | (190) | (239) | |
Income taxes | 15 | 7 | |
Other | (14) | 37 | |
Net cash provided by continuing operating activities | 328 | 283 | |
Net cash provided by (used in) discontinued operating activities | (31) | 67 | |
Net cash provided by operating activities | 297 | 350 | |
Cash Flows From Investing Activities: | |||
Capital expenditures | (210) | (237) | |
Proceeds from sale of property, plant, and equipment | 1 | - | |
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation | 288 | - | |
Other | 3 | - | |
Net cash provided by (used in) continuing investing activities | 82 | (237) | |
Net cash used in discontinued investing activities | (2) | (4) | |
Net cash provided by (used in) investing activities | 80 | (241) | |
Cash Flows From Financing Activities: | |||
Net increase in commercial paper | 63 | 241 | |
Proceeds from issuance of debt | 350 | 119 | |
Repayment of debt | (441) | (708) | |
Proceeds from exercise of share options | 7 | 54 | |
Repurchase of common shares | (519) | (167) | |
Payment of common share dividends to shareholders | (150) | (141) | |
Transfers (to) from discontinued operations | (33) | 63 | |
Other | (29) | (32) | |
Net cash used in continuing financing activities | (752) | (571) | |
Net cash provided by (used in) discontinued financing activities | 33 | (63) | |
Net cash used in financing activities | (719) | (634) | |
Effect of currency translation on cash | (1) | 11 | |
Net decrease in cash, cash equivalents, and restricted cash | (343) | (514) | |
Cash, cash equivalents, and restricted cash at beginning of period | 848 | 1,218 | |
Cash, cash equivalents, and restricted cash at end of period | $ 505 | $ 704 | |
Supplemental Cash Flow Information: | |||
Interest paid | $ 19 | $ 41 | |
Income taxes paid, net of refunds | 75 | 82 | |
TE CONNECTIVITY LTD. | |||
RECONCILIATION OF FREE CASH FLOW (UNAUDITED) | |||
For the Quarters Ended | |||
December 28, | December 29, | ||
2018 | 2017 | ||
(in millions) | |||
Net cash provided by continuing operating activities | $ 328 | $ 283 | |
Excluding: | |||
Cash (collected) paid pursuant to collateral requirements related | |||
to cross-currency swap contracts | (50) | 18 | |
Capital expenditures, net | (209) | (237) | |
Free cash flow (1) | $ 69 | $ 64 | |
(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 | |||||
December 28, | December 29, | ||||
2018 | 2017 | ||||
($ in millions) | |||||
Net Sales | Net Sales | ||||
Transportation Solutions | $ 1,986 | $ 2,032 | |||
Industrial Solutions | 928 | 882 | |||
Communications Solutions | 433 | 422 | |||
Total | $ 3,347 | $ 3,336 | |||
Operating | Operating | Operating | Operating | ||
Income | Margin | Income | Margin | ||
Transportation Solutions | $ 332 | 16.7% | $ 417 | 20.5% | |
Industrial Solutions | 100 | 10.8 | 102 | 11.6 | |
Communications Solutions | 52 | 12.0 | 67 | 15.9 | |
Total | $ 484 | 14.5% | $ 586 | 17.6% | |
Adjusted | Adjusted | Adjusted | Adjusted | ||
Operating | Operating | Operating | Operating | ||
Income (1) | Margin (1) | Income (1) | Margin (1) | ||
Transportation Solutions | $ 356 | 17.9% | $ 426 | 21.0% | |
Industrial Solutions | 138 | 14.9 | 126 | 14.3 | |
Communications Solutions | 71 | 16.4 | 75 | 17.8 | |
Total | $ 565 | 16.9% | $ 627 | 18.8% | |
(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 December 28, 2018 | |||||||||
versus Net Sales for the Quarter Ended December 29, 2017 | |||||||||
Net | Organic Net | ||||||||
Sales Growth | Sales Growth (1) | Translation (2) | Acquisition | ||||||
($ in millions) | |||||||||
Transportation Solutions (3): | |||||||||
Automotive | $ (48) | (3.2)% | $ (9) | (0.6)% | $ (39) | $ - | |||
Commercial transportation | (3) | (1.0) | 5 | 1.7 | (8) | - | |||
Sensors | 5 | 2.3 | 8 | 3.8 | (3) | - | |||
Total | (46) | (2.3) | 4 | 0.2 | (50) | - | |||
Industrial Solutions (3): | |||||||||
Industrial equipment | 12 | 2.5 | (2) | (0.5) | (7) | 21 | |||
Aerospace, defense, oil, and gas | 31 | 12.2 | 33 | 12.7 | (2) | - | |||
Energy | 3 | 1.9 | 9 | 5.8 | (6) | - | |||
Total | 46 | 5.2 | 40 | 4.5 | (15) | 21 | |||
Communications Solutions (3): | |||||||||
Data and devices | 19 | 8.0 | 22 | 9.3 | (3) | - | |||
Appliances | (8) | (4.3) | (3) | (1.7) | (5) | - | |||
Total | 11 | 2.6 | 19 | 4.6 | (8) | - | |||
Total | $ 11 | 0.3% | $ 63 | 1.9% | $ (73) | $ 21 | |||
(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 December 28, 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 | $ 332 | $ 3 | $ 21 | $ 356 | |||
Industrial Solutions | 100 | 3 | 35 | 138 | |||
Communications Solutions | 52 | - | 19 | 71 | |||
Total | $ 484 | $ 6 | $ 75 | $ 565 | |||
Operating Margin | 14.5% | 16.9% | |||||
Other Expense, Net | $ (1) | $ - | $ - | $ (1) | |||
Income Tax Expense | $ (78) | $ (1) | $ (19) | $ (98) | |||
Effective Tax Rate | 16.9% | 18.1% | |||||
Income from Continuing Operations | $ 383 | $ 5 | $ 56 | $ 444 | |||
Diluted Earnings per Share from | |||||||
Continuing Operations | $ 1.11 | $ 0.01 | $ 0.16 | $ 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) See description of non-GAAP financial measures. | |||||||
TE CONNECTIVITY LTD. | |||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES | |||||||||
For the Quarter Ended December 29, 2017 | |||||||||
(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 | $ 417 | $ 5 | $ 4 | $ - | $ 426 | ||||
Industrial Solutions | 102 | 2 | 22 | - | 126 | ||||
Communications Solutions | 67 | - | 8 | - | 75 | ||||
Total | $ 586 | $ 7 | $ 34 | $ - | $ 627 | ||||
Operating Margin | 17.6% | 18.8% | |||||||
Other Income, Net | $ 2 | $ - | $ - | $ (1) | $ 1 | ||||
Income Tax Expense | $ (599) | $ (2) | $ (8) | $ 506 | $ (103) | ||||
Effective Tax Rate | 105.8% | 17.0% | |||||||
Income (Loss) from Continuing | |||||||||
Operations | $ (33) | $ 5 | $ 26 | $ 505 | $ 503 | ||||
Diluted Earnings (Loss) per Share from | |||||||||
Continuing Operations (4) | $ (0.09) | $ 0.01 | $ 0.07 | $ 1.42 | $ 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 $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act and a $61 million income tax benefit related to certain legal entity restructurings. | |||||||||
(3) See description of non-GAAP financial measures. | |||||||||
(4) U.S. GAAP diluted shares excludes 3 million of nonvested restricted share awards and nonvested options as the inclusion of these securities would have been antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares. | |||||||||
TE CONNECTIVITY LTD. | |||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES | |||||||
For the Quarter Ended March 30, 2018 | |||||||
(UNAUDITED) | |||||||
Adjustments | |||||||
Restructuring | |||||||
Acquisition | and Other | ||||||
Related | Charges | Adjusted | |||||
U.S. GAAP | Charges (1) | (Credits), Net (1) | (Non-GAAP) (2) | ||||
($ 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 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 January 23, 2019 | |||
(UNAUDITED) | |||
Outlook for | |||
Quarter Ending | |||
March 29, | Outlook for | ||
2019 | Fiscal 2019 | ||
Diluted earnings per share from continuing operations (GAAP) | $1.13 - $1.17 | $4.94 - $5.14 | |
Restructuring and other charges, net | 0.10 | 0.33 | |
Acquisition related charges | 0.02 | 0.08 | |
Adjusted diluted earnings per share from continuing operations (non-GAAP) (1) | $1.25 - $1.29 | $5.35 - $5.55 | |
Net sales growth (GAAP) | (7)% - (5)% | (4)% - (1)% | |
Translation | 5 | 3 | |
(Acquisitions) divestitures, net | (1) | (1) | |
Organic net sales growth (non-GAAP) (1) | (3)% - (1)% | (2)% - 1% | |
(1) See description of non-GAAP financial measures. | |||
SOURCE TE Connectivity Ltd.
For further information: Media Relations - B.J. Talley, TE Connectivity, 610-893-9553, bj.talley@te.com; Investor Relations - Sujal Shah, TE Connectivity, 610-893-9790, sujal.shah@te.com