01—Abstract
Summary
Summary of the 10-K filed November 13, 2023. Cited figures are marked; the original filing is the authoritative source.
TE Connectivity Ltd. (TEL) reported its fiscal year 2023 results, demonstrating resilience amidst a dynamic economic landscape.
While net sales saw a slight decrease of 1.5% to $16.03 billiona, primarily due to challenges in the Communications Solutions segment, the company achieved a 1.0% organic sales increase, highlighting underlying business strength. The Transportation Solutions segment remains the primary growth engine, with net sales up 4.0% to $9.59 billion, driven by robust performance in the automotive sector. The Industrial Solutions segment also showed modest growth of 1.4% to $4.55 billion, supported by aerospace, defense, energy, and medical markets.
Despite some cost pressures, the company maintained a solid operational performance and generated $3.13 billionb in cash from operating activities. TE Connectivity is actively managing its portfolio through strategic acquisitions and divestitures, including a pending tender offer for Schaffner Holding AG, and continues to return value to shareholders through dividends and share repurchases. The company's outlook for fiscal 2024 indicates a stable sales performance, with continued focus on strategic growth areas and operational efficiency.
02—Key points
Key Highlights
- Net sales for fiscal year 2023 decreased by 1.5% to $16.03 billion, but organic net sales increased by 1.0%, indicating underlying business growth.
- The Transportation Solutions segment continued its strong performance with a 4.0% increase in net sales to $9.59 billion, primarily driven by the automotive end market.
- The Communications Solutions segment experienced a significant decline of 26.3% in net sales to $1.89 billion, attributed to inventory corrections and market softness in data/devices and appliances.
- TE Connectivity generated $3.13 billion in net cash from operating activities in fiscal 2023, demonstrating strong cash flow generation.
- The company is pursuing strategic growth through a pending acquisition of Schaffner Holding AG, a leader in electromagnetic solutions.
- Shareholder returns remain a focus, with the company repurchasing approximately 8 million shares for $946 million and paying dividends totaling $725 million in fiscal 2023.
- The company's gross margin slightly decreased to 31.5% in fiscal 2023 from 32.2% in fiscal 2022, impacted by higher material and operating costs, though offset by pricing actions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, TE Connectivity plc kept $0.12.
- Revenue$16.03B100.0%
- Cost of revenue−$10.98B68.5%
- Gross profit$5.05B31.5%
- Operating costs−$2.75B17.2%
- Operating income$2.30B14.4%
- Interest, other & tax−$394.0M2.5%
- Net income$1.91B11.9%
Where FY2023 revenue went
$16.03B- Cost of revenue: $10.98B, 68% of revenue
- Net income: $1.91B, 12% of revenue
- R&D: $593.0M, 3.7% of revenue
- SG&A: $1.67B, 10% of revenue
- Other operating costs: $488.0M, 3.0% of revenue
- Interest, other & tax: $394.0M, 2.5% of revenue
Kept 12% as net incomeInterest, other & tax $394.0M · 2.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed November 13, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $16.03B$16.28B | −1.5% |
| Cost of Revenue | $10.98B$11.04B | −0.5% |
| Gross Profit | $5.05B$5.24B | −3.6% |
| R&D Expenses | $593.00M$610.00M | −2.8% |
| SG&A Expenses | $1.67B$1.58B | +5.4% |
| Operating Income | $2.30B$2.76B | −16.4% |
| Interest Expense | $80.00M$66.00M | +21.2% |
| Net Income | $1.91B$2.43B | −21.3% |
| EPS (Basic) | $6.06$7.52 | −19.4% |
| EPS (Diluted) | $6.03$7.47 | −19.3% |
| Shares Outstanding (Basic) | 315.00M323.00M | −2.5% |
| Shares Outstanding (Diluted) | 317.00M325.00M | −2.5% |
05—Questions
Frequently Asked Questions
What was TE Connectivity's overall financial performance in fiscal year 2023?
TE Connectivity's net sales for fiscal year 2023 decreased by 1.5% to $16.03 billion compared to fiscal year 2022. However, on an organic basis (excluding currency fluctuations and acquisitions/divestitures), net sales grew by 1.0%, indicating underlying business strength. The company generated $3.13 billion in cash from operating activities.
Which segments performed best and worst in fiscal year 2023?
The Transportation Solutions segment was the strongest performer, with net sales increasing by 4.0% to $9.59 billion, driven by the automotive market. The Industrial Solutions segment saw a modest increase of 1.4% to $4.55 billion. The Communications Solutions segment experienced a significant decline of 26.3% in net sales, falling to $1.89 billion due to inventory corrections and market weakness.
What are the company's key growth strategies and capital allocation priorities?
TE Connectivity is pursuing growth through its core segments, particularly Transportation Solutions. A key strategic move is the pending acquisition of Schaffner Holding AG, which is expected to close in the first quarter of fiscal 2024. The company continues to prioritize returning capital to shareholders through dividends and share repurchases, while also investing in its operations and manufacturing capabilities.
What are the main risks highlighted in the 10-K filing?
The company identifies several key risks, including macroeconomic volatility and cyclical industry demand (especially in the automotive sector), foreign currency exchange rate fluctuations, competition and pricing pressures, supply chain disruptions, raw material costs and availability, cybersecurity threats, and increasing scrutiny on Environmental, Social, and Governance (ESG) matters. Geopolitical instability and trade policies are also noted as significant concerns.
06—Continue