10-QPeriod: Q2 FY2015

TE Connectivity plc Quarterly Report for Q2 Ended Mar 27, 2015

Filed April 23, 2015For Securities:TEL

Summary

TE Connectivity Ltd. (TEL) reported its financial results for the quarter ended March 27, 2015. The company saw an increase in net sales to $3.08 billion, up 4.0% from the prior year, driven by growth across all segments and notably the acquisition of Measurement Specialties. However, operating income decreased slightly to $448 million, impacted by acquisition-related charges and restructuring costs. The company's balance sheet remained largely stable, with total assets at $20.24 billion. A significant development was the agreement to sell its Broadband Network Solutions (BNS) business for $3.0 billion, which is expected to close in calendar year 2015. This divestiture, along with the acquisition of Measurement Specialties, reflects ongoing strategic portfolio management. Investors should note the company's continued focus on operational efficiency and strategic acquisitions/divestitures.

Financial Highlights

56 data points
Beta

Revenue

$3.08B

34.1% Gross Margin

Net Income

$599.00M

19.4% Net Margin

EPS (Diluted)

$1.45

Total Assets

$20.24B

Cash & Equivalents

$697.00M

Free Cash Flow

$242.00M

Financial Statements
Beta
Revenue$3.08B
Cost of Revenue$2.03B
Gross Profit$1.05B
SG&A Expenses$391.00M
Operating Income$448.00M
Interest Expense$37.00M
Net Income$599.00M
EPS (Basic)$1.47
EPS (Diluted)$1.45
Shares Outstanding (Basic)407.00M
Shares Outstanding (Diluted)413.00M

Key Highlights

  • 1Net sales increased by 4.0% to $3.08 billion for the quarter, with organic net sales up 6.2%.
  • 2Operating income for the quarter was $448 million, a decrease from $471 million in the prior year, due to higher acquisition and restructuring costs.
  • 3The company agreed to sell its Broadband Network Solutions (BNS) business for $3.0 billion, which is classified as held for sale and discontinued operations.
  • 4Acquisition of Measurement Specialties for approximately $1.7 billion (net of cash acquired) was completed in October 2014, contributing to sales.
  • 5Diluted earnings per share from continuing operations were $0.77, down from $0.82 in the prior year's quarter.
  • 6Cash and cash equivalents decreased significantly to $697 million from $2,457 million at the end of the prior fiscal year, primarily due to investing activities.
  • 7The company announced a quarterly dividend of $0.33 per share.

Frequently Asked Questions

The primary driver for the 4.0% increase in net sales to $3.08 billion was growth across all segments, significantly boosted by the acquisition of Measurement Specialties, Inc. which contributed $138 million in sales for the quarter. Organic net sales also saw a healthy increase of 6.2%.

Classifying the BNS business as discontinued operations and holding it for sale indicates that TE Connectivity has entered into a definitive agreement to sell this business. The company expects to close the sale for $3.0 billion in calendar year 2015. This is a strategic move to streamline the company's portfolio and focus on core areas.

The acquisition of Measurement Specialties, completed in October 2014 for approximately $1.7 billion, contributed $138 million in net sales during the quarter ended March 27, 2015, primarily within the Transportation Solutions segment. This acquisition is a key factor in the company's sales growth and strategic positioning in the sensor market.

For the third quarter of fiscal 2015, TE Connectivity expects net sales between $3.13 billion and $3.23 billion, with continued strength in Communications Solutions (subsea) and Transportation Solutions, partially offset by Industrial Solutions. Diluted earnings per share from continuing operations are projected to be between $0.80 and $0.84.