10-QPeriod: Q1 FY2014

TE Connectivity plc Quarterly Report for Q1 Ended Dec 27, 2013

Filed January 23, 2014For Securities:TEL

Summary

TE Connectivity Ltd. (TEL) reported a solid increase in net sales and operating income for the first quarter of fiscal year 2014, compared to the prior year's quarter. Net sales grew by 6.1% to $3,326 million, driven primarily by a strong performance in the Transportation Solutions segment, which saw a 13.9% increase in net sales. Organic net sales also showed robust growth of 7.2%. The company's gross margin improved significantly due to better manufacturing productivity and higher volumes, leading to a substantial increase in operating income. Despite the overall positive performance, the Network Solutions segment experienced a slight decline in net sales, while the Consumer Solutions segment saw a modest decrease. The company also incurred restructuring charges, though significantly less than in the prior year. Management provided positive outlooks for the second quarter and full fiscal year 2014, anticipating continued sales growth, particularly in the automotive sector. The company also continued its share repurchase program, demonstrating confidence in its financial position and commitment to returning value to shareholders.

Financial Highlights

55 data points
Beta

Revenue

$2.86B

33.0% Gross Margin

Net Income

$353.00M

12.3% Net Margin

EPS (Diluted)

$0.84

Total Assets

$18.44B

Cash & Equivalents

$1.40B

Free Cash Flow

$252.00M

Financial Statements
Beta
Revenue$2.86B
Cost of Revenue$2.21B
Gross Profit$945.00M
SG&A Expenses$467.00M
Operating Income$479.00M
Interest Expense$34.00M
Net Income$353.00M
EPS (Basic)$0.86
EPS (Diluted)$0.84
Shares Outstanding (Basic)411.00M
Shares Outstanding (Diluted)418.00M

Key Highlights

  • 1Net sales increased by 6.1% to $3,326 million in Q1 FY14 compared to Q1 FY13.
  • 2Operating income more than doubled, increasing to $479 million from $293 million in the prior year's quarter.
  • 3Gross margin improved to 33.6% from 31.6%, driven by higher volumes and productivity.
  • 4Transportation Solutions segment showed strong growth with a 13.9% increase in net sales.
  • 5The company continued its share repurchase program, authorizing an additional $1 billion increase.
  • 6Management provided an optimistic outlook for Q2 and full-year FY14, projecting continued sales growth.

Frequently Asked Questions

The primary driver of the revenue increase was a strong performance in the Transportation Solutions segment, which saw a 13.9% increase in net sales. Overall net sales increased by 6.1%, with organic net sales growing by 7.2%.

Profitability significantly improved. Operating income increased by $186 million to $479 million, driven by higher net sales, improved gross margins due to better manufacturing productivity and volume, and a substantial decrease in restructuring and other charges compared to the prior year.

TE Connectivity provided an optimistic outlook, expecting net sales for fiscal 2014 to be between $13.8 billion and $14.2 billion. They anticipate continued sales growth in the Transportation and Industrial Solutions segments, with Network and Consumer Solutions segments expected to remain consistent with fiscal 2013 levels. Diluted earnings per share for fiscal 2014 are projected to be in the range of $3.60 to $3.80.

The company actively engaged in its share repurchase program. In the first quarter of fiscal 2014, the board of directors authorized an additional $1 billion increase to the program. They repurchased approximately 4 million shares for $212 million during the quarter, and had $1,267 million of availability remaining under the program as of December 27, 2013.