10-KPeriod: FY2017

TE Connectivity plc Annual Report, Year Ended Sep 29, 2017

Filed November 14, 2017For Securities:TEL

Summary

TE Connectivity Ltd. (TEL) reported strong performance in its fiscal year 2017, with net sales increasing by 7.1% to $13.11 billion. This growth was driven by robust demand in the Transportation Solutions segment, which saw an 8.2% increase in net sales, and a significant 9.1% rise in the Industrial Solutions segment, bolstered by strategic acquisitions. The Communications Solutions segment also experienced growth, albeit at a slower pace of 1.9%. The company demonstrated solid operational execution, with gross margin improving to 33.9% and operating income rising to $2.05 billion. TE Connectivity returned substantial value to shareholders through dividends and share repurchases, underscoring a focus on financial discipline and shareholder returns. The company's outlook for fiscal 2018 remained positive, with expectations for continued sales growth across its key segments, driven by ongoing trends in automotive content per vehicle, industrial automation, and smart devices.

Financial Highlights

54 data points
Beta

Revenue

$12.19B

34.3% Gross Margin

Net Income

$1.68B

13.8% Net Margin

EPS (Diluted)

$4.70

Total Assets

$19.40B

Cash & Equivalents

$1.22B

Free Cash Flow

$1.64B

Financial Statements
Beta
Revenue$12.19B
Cost of Revenue$8.00B
Gross Profit$4.18B
R&D Expenses$548.00M
SG&A Expenses$1.54B
Operating Income$1.88B
Interest Expense$130.00M
Net Income$1.68B
EPS (Basic)$4.74
EPS (Diluted)$4.70
Shares Outstanding (Basic)355.00M
Shares Outstanding (Diluted)358.00M

Key Highlights

  • 1Net sales increased by 7.1% to $13.11 billion in fiscal year 2017, driven by growth in the Transportation and Industrial Solutions segments.
  • 2Transportation Solutions segment net sales grew 8.2% driven by automotive and commercial transportation markets.
  • 3Industrial Solutions segment net sales increased by 9.1%, benefiting from acquisitions and growth in industrial equipment.
  • 4Gross margin improved to 33.9% in fiscal year 2017 from 33.0% in fiscal year 2016.
  • 5Operating income increased to $2.05 billion, with an operating margin of 15.6%.
  • 6The company repurchased approximately 8 million shares for $621 million in fiscal year 2017 and paid dividends totaling $546 million.
  • 7Positive outlook for fiscal 2018 with expected net sales between $13.7 billion and $14.1 billion.

Frequently Asked Questions

TE Connectivity's revenue growth in fiscal year 2017 was primarily driven by its Transportation Solutions segment, which benefited from increased sales in the automotive and commercial transportation end markets. The Industrial Solutions segment also saw significant growth, supported by demand in industrial equipment and contributions from recent acquisitions. The Communications Solutions segment experienced growth, primarily in appliances and subsea communications, though it was partially offset by a decline in data and devices.

TE Connectivity improved its profitability in fiscal year 2017 with a gross margin of 33.9%, up from 33.0% in the prior year, attributed to higher volumes and lower material costs, partially offset by price erosion. Operating expenses, such as Selling, General, and Administrative (SG&A) expenses, increased due to higher incentive compensation and selling expenses to support sales growth. The company also incurred restructuring charges of $148 million, primarily related to footprint consolidation and structural improvements.

TE Connectivity continues to pursue a strategy of strategic acquisitions to strengthen its market position and enhance its product offerings. In fiscal year 2017, the company acquired two businesses for $250 million. In fiscal year 2016, it acquired four businesses, including Creganna, for $1.3 billion. The company also strategically divested its Circuit Protection Devices (CPD) business in fiscal year 2016. This balanced approach allows the company to expand its capabilities and focus on core growth areas.

TE Connectivity returned capital to shareholders through a combination of dividend payments and share repurchases. In fiscal year 2017, the company paid dividends totaling $546 million, representing $1.54 per share. It also repurchased approximately 8 million shares for $621 million, with $480 million of authorization remaining at the end of the fiscal year. These actions reflect the company's commitment to enhancing shareholder value.