TE Connectivity announces results for second quarter of fiscal year 2019
SCHAFFHAUSEN, Switzerland, April 24, 2019 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal second quarter, which ended March 29, 2019.
Second Quarter Highlights
-- Net sales of $3.4 billion, exceeding the company's guidance
-- Diluted earnings per share (EPS) from continuing operations were $1.26,
and adjusted EPS were $1.42, both exceeding the high-end of the
company's guidance
-- Cash flow from continuing operating activities was $555 million and free
cash flow was $344 million, with $338 million returned to shareholders
-- Orders were $3.5 billion in the quarter, 4% higher than the first
quarter of 2019
Second Quarter Results
For the second quarter, the company reported net sales of $3.4 billion, with diluted EPS from continuing operations of $1.26, and adjusted EPS were $1.42. Cash flow from continuing operating activities was $555 million and free cash flow was $344 million. Year-to-date cash flow from continuing operations was $883 million, up 37% from 2018, and free cash flow year-to-date was $413 million, a 44% improvement over the prior year. Total orders were $3.5 billion, up 4% sequentially with growth in all segments, and the book-to-bill ratio was 1.01.
"I'm proud of our execution in the second quarter where we delivered sales and earnings per share above our expectations and generated strong free cash flow, despite an expected slow market environment. Our Industrial segment grew 5 percent organically year-over-year, driven by strength in our aerospace, defense and medical businesses, and our Transportation segment's content momentum allowed us to outperform automotive production weakness," said Terrence Curtin, chief executive officer of TE Connectivity. "These results reflect the diversity of our industrial technology portfolio, multiple levers in our business model and the ability of our global teams to deliver for our customers and shareholders. As a result of strong second quarter profitability and a stable outlook for the second half of fiscal 2019, we are raising our earnings per share guidance for the full year."
2019 Outlook
For the fiscal third quarter of 2019, the company expects net sales of $3.4 billion to $3.5 billion. Diluted EPS from continuing operations are expected to be $1.13 to $1.17, including net restructuring, acquisition-related and other charges of $0.28. The company expects adjusted EPS of $1.41 to $1.45.
For the full year, the company expects net sales of $13.55 billion to $13.75 billion. Diluted EPS from continuing operations are expected to be $4.88 to $4.98, including net restructuring, acquisition-related, tax and other charges of $0.67. The company expects adjusted EPS of $5.55 to $5.65.
Information about TE Connectivity's use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables.
Conference Call and Webcast
The company will hold a conference call today beginning at 8:30 a.m. ET. The dial-in information is provided here:
-- At TE Connectivity's website: investors.te.com
-- By telephone: For both "listen-only" participants and those participants
who wish to take part in the question-and-answer portion of the call,
the dial-in number in the United States is (800) 230-1093, and for
international callers, the dial-in number is (612) 332-0107.
-- An audio replay of the conference call will be available beginning at
10:30 a.m. ET on April 24, 2019 and ending at 11:59 p.m. ET on May 1,
2019. The dial-in number for participants in the United States is (800)
475-6701. For participants outside the United States, the dial-in number
is (320) 365-3844. The replay access code for all callers is 464389.
ABOUT TE CONNECTIVITY
TE Connectivity Ltd. is a $14 billion global technology and manufacturing leader creating a safer, sustainable, productive, and connected future. For more than 75 years, our connectivity and sensor solutions, proven in the harshest environments, have enabled advancements in transportation, industrial applications, medical technology, energy, data communications, and the home. With 80,000 employees, including more than 8,000 engineers, working alongside customers in approximately 140 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on 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 For the Six Months Ended
March 29,
March 30,
March 29,
March 30,
2019 2018 2019 2018
(in millions, except per share data)
Net sales $3,412 $3,562 $6,759 $6,898
Cost of sales 2,294 2,350 4,527 4,522
Gross margin 1,118 1,212 2,232 2,376
Selling, general, and administrative expenses 373 409 762 786
Research, development, and engineering expenses 166 173 327 338
Acquisition and integration costs 7 3 12 5
Restructuring and other charges, net 42 6 117 40
Operating income 530 621 1,014 1,207
Interest income 4 4 9 8
Interest expense (15) (28) (42) (54)
Other income, net 1 1 3
Income from continuing operations before income taxes 520 598 981 1,164
Income tax expense (91) (108) (169) (707)
Income from continuing operations 429 490 812 457
Income (loss) from discontinued operations, net of income taxes 10 (97) (7)
Net income $439 $490 $715 $450
===
Basic earnings per share:
Income from continuing operations $1.27 $1.40 $2.39 $1.30
Income (loss) from discontinued operations 0.03 (0.29) (0.02)
Net income 1.30 1.40 2.10 1.28
Diluted earnings per share:
Income from continuing operations $1.26 $1.38 $2.37 $1.29
Income (loss) from discontinued operations 0.03 (0.28) (0.02)
Net income 1.29 1.38 2.09 1.27
Weighted-average number of shares outstanding:
Basic 338 351 340 351
Diluted 340 354 342 355
TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 29,
September 28,
2019 2018
(in millions, except share data)
Assets
Current assets:
Cash and cash equivalents $565 $848
Accounts receivable, net of allowance for doubtful accounts of $24 and $22, respectively 2,463 2,361
Inventories 1,970 1,857
Prepaid expenses and other current assets 448 661
Assets held for sale - 472
Total current assets 5,446 6,199
Property, plant, and equipment, net 3,596 3,497
Goodwill 5,626 5,684
Intangible assets, net 1,596 1,704
Deferred income taxes 2,607 2,144
Other assets 391 1,158
Total assets $19,262 $20,386
===
Liabilities and shareholders' equity
Current liabilities:
Short-term debt $612 $963
Accounts payable 1,485 1,548
Accrued and other current liabilities 1,770 1,711
Liabilities held for sale - 188
Total current liabilities 3,867 4,410
Long-term debt 3,370 3,037
Long-term pension and postretirement liabilities 1,081 1,102
Deferred income taxes 196 207
Income taxes 333 312
Other liabilities 421 487
Total liabilities 9,268 9,555
Commitments and contingencies
Shareholders' equity:
Common shares, CHF 0.57 par value, 357,069,981 shares authorized and issued 157 157
Accumulated earnings 11,710 12,114
Treasury shares, at cost, 19,761,517 and 12,279,603 shares, respectively (1,713) (1,134)
Accumulated other comprehensive loss (160) (306)
Total shareholders' equity 9,994 10,831
Total liabilities and shareholders' equity $19,262 $20,386
===
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Quarters Ended For the Six Months Ended
March 29,
March 30,
March 29,
March 30,
2019 2018 2019 2018
(in millions)
Cash flows from operating activities:
Net income $439 $490 $715 $450
(Income) loss from discontinued operations, net of income taxes (10) 97 7
Income from continuing operations 429 490 812 457
Adjustments to reconcile income from continuing operations to net cash
provided by operating activities:
Depreciation and amortization 173 167 341 329
Deferred income taxes (17) (13) (28) 497
Provision for losses on accounts receivable and inventories 5 8 28 25
Share-based compensation expense 15 23 38 51
Other 14 (11) 32 (17)
Changes in assets and liabilities, net of the effects of acquisitions
and divestitures:
Accounts receivable, net (81) (237) (107) (376)
Inventories 49 (50) (70) (227)
Prepaid expenses and other current assets 24 (60) 91 (105)
Accounts payable (35) 23 (44) 184
Accrued and other current liabilities (16) 29 (206) (210)
Income taxes 6 (5) 21 2
Other (11) (2) (25) 35
Net cash provided by continuing operating activities 555 362 883 645
Net cash provided by (used in) discontinued operating activities 1 15 (30) 82
Net cash provided by operating activities 556 377 853 727
Cash flows from investing activities:
Capital expenditures (191) (202) (401) (439)
Proceeds from sale of property, plant, and equipment 12 7 13 7
Proceeds from divestiture of discontinued operation, net of cash
retained by sold operation 9 297 -
Other 5 (2) 8 (2)
Net cash used in continuing investing activities (165) (197) (83) (434)
Net cash used in discontinued investing activities - (4) (2) (8)
Net cash used in investing activities (165) (201) (85) (442)
Cash flows from financing activities:
Net increase (decrease) in commercial paper 27 (16) 90 225
Proceeds from issuance of debt - 350 119
Repayment of debt - (441) (708)
Proceeds from exercise of share options 10 40 17 94
Repurchase of common shares (220) (214) (739) (381)
Payment of common share dividends to shareholders (149) (140) (299) (281)
Transfers (to) from discontinued operations 1 11 (32) 74
Other (1) (30) (32)
Net cash used in continuing financing activities (332) (319) (1,084) (890)
Net cash provided by (used in) discontinued financing activities (1) (11) 32 (74)
Net cash used in financing activities (333) (330) (1,052) (964)
Effect of currency translation on cash 2 9 1 20
Net increase (decrease) in cash, cash equivalents, and restricted cash 60 (145) (283) (659)
Cash, cash equivalents, and restricted cash at beginning of period 505 704 848 1,218
Cash, cash equivalents, and restricted cash at end of period $565 $559 $565 $559
===
Supplemental cash flow information:
Interest paid $33 $38 $52 $79
Income taxes paid, net of refunds 102 126 177 208
TE CONNECTIVITY LTD.
RECONCILIATION OF FREE CASH FLOW (UNAUDITED)
For the Quarters Ended For the Six Months Ended
March 29,
March 30,
March 29,
March 30,
2019 2018 2019 2018
(in millions)
Net cash provided by continuing operating activities $555 $362 $883 $645
Excluding:
Receipts related to pre-separation U.S. tax matters, net - (5) (5)
Cash (collected) paid pursuant to collateral requirements
related to cross-currency swap contracts (32) 61 (82) 79
Capital expenditures, net (179) (195) (388) (432)
Free cash flow (1) $344 $223 $413 $287
===
(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.
TE CONNECTIVITY LTD.
CONSOLIDATED SEGMENT DATA (UNAUDITED)
For the Quarters Ended
For the Six Months Ended
---
March 29, March 30, March 29, March 30,
2019 2018 2019 2018
($ in millions)
Net Sales
Net Sales
Net Sales
Net Sales
Transportation Solutions $1,971 $2,134 $3,957 $4,166
Industrial Solutions 1,007 972 1,935 1,854
Communications Solutions 434 456 867 878
Total $3,412 $3,562 $6,759 $6,898
Operating Operating
Operating Operating
Operating Operating
Operating Operating
Income Margin
Income Margin
Income Margin
Income Margin
---
Transportation Solutions $316 16.0% $427 20.0% $648 16.4% $844 20.3%
Industrial Solutions 137 13.6 125 12.9 237 12.2 227 12.2
Communications Solutions 77 17.7 69 15.1 129 14.9 136 15.5
Total $530 15.5% $621 17.4% $1,014 15.0% $1,207 17.5%
Adjusted Adjusted
Adjusted Adjusted
Adjusted Adjusted
Adjusted Adjusted
Operating Operating
Operating Operating
Operating Operating
Operating Operating
Income (1) Margin (1)
Income (1) Margin (1)
Income (1) Margin (1)
Income (1) Margin (1)
---
Transportation Solutions $344 17.5% $427 20.0% $700 17.7% $853 20.5%
Industrial Solutions 159 15.8 135 13.9 297 15.3 261 14.1
Communications Solutions 78 18.0 70 15.4 149 17.2 145 16.5
Total $581 17.0% $632 17.7% $1,146 17.0% $1,259 18.3%
(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures.
TE CONNECTIVITY LTD.
RECONCILIATION OF NET SALES GROWTH (UNAUDITED)
Change in Net Sales for the Quarter Ended March 29, 2019
versus Net Sales for the Quarter Ended March 30, 2018
Net Organic Net
Sales Growth Sales Growth (1)
Translation (2)
Acquisition
---
($ in millions)
Transportation Solutions (3):
Automotive $(146) (9.3)% $(70) (4.6)% $(76)
$ -
Commercial transportation (9) (2.7) 6 1.6 (15) -
Sensors (8) (3.5) 2 1.0 (10) -
Total (163) (7.6) (62) (2.9) (101) -
Industrial Solutions (3):
Industrial equipment 6 1.2 5 0.8 (20) 21
Aerospace, defense, oil, and gas 33 11.1 39 13.3 (6) -
Energy (4) (2.2) 9 4.2 (13) -
Total 35 3.6 53 5.4 (39) 21
Communications Solutions (3):
Data and devices (7) (2.7) (0.1) (7) -
Appliances (15) (7.6) (8) (4.1) (7) -
Total (22) (4.8) (8) (1.8) (14) -
Total $(150) (4.2)% $(17) (0.5)% $(154) $21
===
Change in Net Sales for the Six Months Ended March 29, 2019
versus Net Sales for the Six Months Ended March 30, 2018
Net Organic Net
Sales Growth Sales Growth (1)
Translation (2)
Acquisition
---
($ in millions)
Transportation Solutions (3):
Automotive $(194) (6.3)% $(79) (2.6)% $(115)
$ -
Commercial transportation (12) (1.9) 11 1.6 (23) -
Sensors (3) (0.7) 10 2.3 (13) -
Total (209) (5.0) (58) (1.4) (151) -
Industrial Solutions (3):
Industrial equipment 18 1.9 3 0.2 (27) 42
Aerospace, defense, oil, and gas 64 11.6 72 13.1 (8) -
Energy (1) (0.3) 18 5.0 (19) -
Total 81 4.4 93 5.0 (54) 42
Communications Solutions (3):
Data and devices 12 2.4 22 4.5 (10) -
Appliances (23) (6.0) (11) (2.9) (12) -
Total (11) (1.3) 11 1.3 (22) -
Total $(139) (2.0)% $46 0.7% $(227) $42
===
(1) Organic net sales growth is a non-GAAP financial measure. See description of non-GAAP financial measures.
(2) Represents the change in net sales resulting from changes in foreign currency exchange rates.
(3) Industry end market information is presented consistently with our internal management reporting and may be periodically revised as management deems necessary.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended March 29, 2019
(UNAUDITED)
Adjustments
Acquisition
Restructuring
Related
and Other
Tax
Adjusted
U.S. GAAP
Charges (1)
Charges, Net (1)
Items (2)
(Non-GAAP) (3)
---
($ in millions, except per share data)
Operating income:
Transportation Solutions $316 $4 $24
$ - $344
Industrial Solutions 137 5 17 159
Communications Solutions 77 1 78
Total $530 $9 $42
$ - $581
===
Operating margin 15.5% 17.0%
Other income, net $1
$ -
$ -
$ - $1
===
Income tax expense $(91) $(2) $(10) $15 $(88)
===
Effective tax rate 17.5% 15.4%
Income from continuing operations $429 $7 $32 $15 $483
===
Diluted earnings per share from
continuing operations $1.26 $0.02 $0.09 $0.04 $1.42
===
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Includes income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions.
(3) See description of non-GAAP financial measures.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended March 30, 2018
(UNAUDITED)
Adjustments
Restructuring
Acquisition
and Other
Related
Charges
Adjusted
U.S. GAAP
Charges (1) (Credits), Net (1)
(Non-GAAP) (2)
---
($ in millions, except per share data)
Operating income:
Transportation Solutions $427 $2 $(2) $427
Industrial Solutions 125 3 7 135
Communications Solutions 69 1 70
Total $621 $5 $6 $632
===
Operating margin 17.4% 17.7%
Other income, net $1
$ -
$ - $1
===
Income tax expense $(108)
$ - $1 $(107)
===
Effective tax rate 18.1% 17.6%
Income from continuing operations $490 $5 $7 $502
===
Diluted earnings per share from
continuing operations $1.38 $0.01 $0.02 $1.42
===
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) See description of non-GAAP financial measures.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Six Months Ended March 29, 2019
(UNAUDITED)
Adjustments
Acquisition
Restructuring
Related
and Other
Tax
Adjusted
U.S. GAAP
Charges (1)
Charges, Net (1)
Items (2)
(Non-GAAP) (3)
---
($ in millions, except per share data)
Operating income:
Transportation Solutions $648 $7 $45
$ - $700
Industrial Solutions 237 8 52 297
Communications Solutions 129 20 149
Total $1,014 $15 $117
$ - $1,146
===
Operating margin 15.0% 17.0%
Income tax expense $(169) $(3) $(29) $15 $(186)
===
Effective tax rate 17.2% 16.7%
Income from continuing operations $812 $12 $88 $15 $927
===
Diluted earnings per share from
continuing operations $2.37 $0.04 $0.26 $0.04 $2.71
===
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Includes income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions.
(3) See description of non-GAAP financial measures.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Six Months Ended March 30, 2018
(UNAUDITED)
Adjustments
Acquisition
Restructuring
Related
and Other
Tax
Adjusted
U.S. GAAP
Charges (1)
Charges, Net (1)
Items (2)
(Non-GAAP) (3)
---
($ in millions, except per share data)
Operating income:
Transportation Solutions $844 $7 $2
$ - $853
Industrial Solutions 227 5 29 261
Communications Solutions 136 9 145
Total $1,207 $12 $40
$ - $1,259
===
Operating margin 17.5% 18.3%
Other income, net $3
$ -
$ - $(1) $2
===
Income tax expense $(707) $(2) $(7) $506 $(210)
===
Effective tax rate 60.7% 17.3%
Income from continuing operations $457 $10 $33 $505 $1,005
===
Diluted earnings per share from
continuing operations $1.29 $0.03 $0.09 $1.42 $2.83
===
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Includes $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act and a $61 million income tax benefit related to certain legal entity restructurings.
(3) See description of non-GAAP financial measures.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended June 29, 2018
(UNAUDITED)
Adjustments
Acquisition
Restructuring
Related
and Other
Adjusted
U.S. GAAP
Charges (1)
Charges, Net (1)
(Non-GAAP) (2)
---
($ in millions, except per share data)
Operating income:
Transportation Solutions $393 $2 $11 $406
Industrial Solutions 92 3 47 142
Communications Solutions 69 6 75
Total $554 $5 $64 $623
===
Operating margin 15.5% 17.4%
Other expense, net $(1)
$ -
$ - $(1)
===
Income tax expense $(77) $(2) $(20) $(99)
===
Effective tax rate 14.5% 16.5%
Income from continuing operations $453 $3 $44 $500
===
Diluted earnings per share from
continuing operations $1.29 $0.01 $0.13 $1.42
===
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) See description of non-GAAP financial measures.
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Year Ended September 28, 2018
(UNAUDITED)
Adjustments
Acquisition
Restructuring
Related
and Other
Tax
Adjusted
U.S. GAAP
Charges (1)
Charges, Net (1)
Items (2)
(Non-GAAP) (3)
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($ in millions, except per share data)
Operating income:
Transportation Solutions $1,578 $12 $33
$ - $1,623
Industrial Solutions 465 10 80 555
Communications Solutions 288 13 301
Total $2,331 $22 $126
$ - $2,479
===
Operating margin 16.7% 17.7%
Other income, net $1
$ -
$ - $(1)
$ -
===
Income tax (expense) benefit $344 $(5) $(31) $(716) $(408)
===
Effective tax rate (15.4)% 17.1%
Income from continuing operations $2,584 $17 $95 $(717) $1,979
===
Diluted earnings per share from
continuing operations $7.32 $0.05 $0.27 $(2.03) $5.61
===
(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.
(2) Includes a $1,283 million net income tax benefit associated with the tax impacts of certain intercompany transactions and legal entity restructurings including an increase to the valuation allowance. Also includes $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act.
(3) See description of non-GAAP financial measures.
TE CONNECTIVITY LTD.
RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of April 24, 2019
(UNAUDITED)
Outlook for
Quarter Ending
June 28,
Outlook for
2019
Fiscal 2019
Diluted earnings per share from continuing operations (GAAP)
$1.13 - $1.17
$4.88 - $4.98
Restructuring and other charges, net 0.26 0.55
Acquisition related charges 0.02 0.08
Tax items - 0.04
Adjusted diluted earnings per share from continuing operations (non-GAAP) (1)
$1.41 - $1.45
$5.55 - $5.65
===
Net sales growth (GAAP) (5)% - (2)% (3)% - (1)%
Translation 3 3
(Acquisitions) divestitures, net - (1)
Organic net sales growth (non-GAAP) (1) (2)% - 1% (1)% - 1%
===
(1) See description of non-GAAP financial measures.
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SOURCE TE Connectivity Ltd.
