10-KPeriod: FY2022

TE Connectivity plc Annual Report, Year Ended Sep 30, 2022

Filed November 15, 2022For Securities:TEL

Summary

TE Connectivity Ltd. (TEL) reported strong performance for the fiscal year ended September 29, 2022, with net sales increasing 9.1% to $16.3 billion. This growth was primarily driven by organic net sales increases of 12.1%, reflecting strong demand across its key segments, particularly Communications Solutions and Industrial Solutions. The company highlighted its resilient business model, diversified customer base, and ability to navigate macroeconomic challenges, including inflationary pressures and supply chain disruptions, through strategic pricing actions and cost management. While foreign currency translation had a negative impact of $723 million on net sales, the company demonstrated effective operational execution, leading to a 16.9% operating margin. TE Connectivity continues to invest in innovation and strategic acquisitions to support its long-term growth objectives, with a focus on trends like transportation electrification, industrial automation, and data connectivity. The company's commitment to sustainability and robust human capital management further underscore its strategic positioning for future value creation.

Financial Highlights

54 data points
Beta

Revenue

$16.28B

32.2% Gross Margin

Net Income

$2.43B

14.9% Net Margin

EPS (Diluted)

$7.47

Total Assets

$20.78B

Cash & Equivalents

$1.09B

Free Cash Flow

$1.70B

Financial Statements
Beta
Revenue$16.28B
Cost of Revenue$11.04B
Gross Profit$5.24B
R&D Expenses$610.00M
SG&A Expenses$1.58B
Operating Income$2.76B
Interest Expense$66.00M
Net Income$2.43B
EPS (Basic)$7.52
EPS (Diluted)$7.47
Shares Outstanding (Basic)323.00M
Shares Outstanding (Diluted)325.00M

Key Highlights

  • 1Net sales increased by 9.1% to $16.3 billion in fiscal year 2022, driven by a 12.1% organic net sales growth.
  • 2Operating income grew by 13.2% to $2.76 billion, resulting in an operating margin of 16.9%.
  • 3The Transportation Solutions segment saw net sales increase by 2.7% to $9.2 billion, with strong organic growth in Automotive.
  • 4The Industrial Solutions segment experienced robust growth, with net sales up 17.6% to $4.5 billion, driven by Industrial Equipment and Energy markets.
  • 5The Communications Solutions segment reported the highest growth, with net sales increasing by 20.8% to $2.5 billion, primarily due to demand in Data and Devices.
  • 6The company repurchased approximately 10 million shares for $1.4 billion in fiscal year 2022 and had $1.7 billion remaining under its share repurchase authorization.
  • 7TE Connectivity is committed to sustainability, having reduced absolute energy usage by over 20%, water usage by over 25%, and greenhouse gas emissions by over 50% since fiscal 2010.

Frequently Asked Questions

TE Connectivity's revenue growth in fiscal year 2022 was primarily driven by organic net sales increases of 12.1%. This was fueled by strong demand across its key segments, particularly in the Communications Solutions and Industrial Solutions segments, with notable contributions from automotive content growth in the Transportation Solutions segment. Strategic pricing actions also positively contributed to net sales.

Foreign currency exchange rates had a negative impact on TE Connectivity's financial performance in fiscal year 2022. Net sales were negatively impacted by $723 million due to the weakening of certain foreign currencies against the U.S. dollar. The company anticipates this translation effect will continue to negatively impact net sales in fiscal year 2023.

TE Connectivity is actively managing costs and inflationary pressures through several strategies. This includes implementing price increases for a number of its products, focusing on cost reduction initiatives such as reducing discretionary spending and travel, and optimizing its global manufacturing footprint through restructuring programs. The company aims to offset cost increases through productivity improvements and these pricing actions.

TE Connectivity is monitoring global economic conditions, including the conflict between Russia and Ukraine and supply chain disruptions. The company suspended operations in Russia and reduced operations in Ukraine. It has experienced increased costs for transportation, energy, and raw materials due to these factors but has been able to partially mitigate them through price increases and productivity measures. The company emphasizes its ability to partially offset these impacts and notes that neither Russia nor Ukraine represents a material portion of its business.