01—Abstract
Summary
Summary of the 10-K filed November 14, 2017. Cited figures are marked; the original filing is the authoritative source.
TE Connectivity Ltd. (TEL) reported strong performance in its fiscal year 2017, with net sales increasing by 7.1% to $13.11 billiona.
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 billionb.
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.
02—Key points
Key Highlights
- Net sales increased by 7.1% to $13.11 billion in fiscal year 2017, driven by growth in the Transportation and Industrial Solutions segments.
- Transportation Solutions segment net sales grew 8.2% driven by automotive and commercial transportation markets.
- Industrial Solutions segment net sales increased by 9.1%, benefiting from acquisitions and growth in industrial equipment.
- Gross margin improved to 33.9% in fiscal year 2017 from 33.0% in fiscal year 2016.
- Operating income increased to $2.05 billion, with an operating margin of 15.6%.
- The company repurchased approximately 8 million shares for $621 million in fiscal year 2017 and paid dividends totaling $546 million.
- Positive outlook for fiscal 2018 with expected net sales between $13.7 billion and $14.1 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, TE Connectivity plc kept $0.14.
- Revenue$12.19B100.0%
- Cost of revenue−$8.00B65.7%
- Gross profit$4.18B34.3%
- Operating costs−$2.31B18.9%
- Operating income$1.88B15.4%
- Interest, other & tax−$193.0M1.6%
- Net income$1.68B13.8%
Where FY2017 revenue went
$12.19B- Cost of revenue: $8.00B, 66% of revenue
- Net income: $1.68B, 14% of revenue
- SG&A: $1.54B, 13% of revenue
- R&D: $548.0M, 4.5% of revenue
- Other operating costs: $216.0M, 1.8% of revenue
- Interest, other & tax: $193.0M, 1.6% of revenue
Kept 14% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed November 14, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $12.19B$11.35B | +7.3% |
| Cost of Revenue | $8.00B$7.53B | +6.3% |
| Gross Profit | $4.18B$3.83B | +9.3% |
| R&D Expenses | $548.00M$525.00M | +4.4% |
| SG&A Expenses | $1.54B$1.40B | +10.5% |
| Operating Income | $1.88B$1.81B | +3.8% |
| Interest Expense | $130.00M$127.00M | +2.4% |
| Net Income | $1.68B$2.01B | −16.2% |
| EPS (Basic) | $4.74$5.49 | −13.7% |
| EPS (Diluted) | $4.70$5.44 | −13.6% |
| Shares Outstanding (Basic) | 355.00M366.00M | −3.0% |
| Shares Outstanding (Diluted) | 358.00M369.00M | −3.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of TE Connectivity's revenue growth in fiscal year 2017?
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.
How did TE Connectivity manage its expenses and profitability in fiscal year 2017?
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.
What is TE Connectivity's strategy regarding acquisitions and divestitures?
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.
How is TE Connectivity returning capital to shareholders?
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.
06—Continue