10-QPeriod: Q1 FY2021

TE Connectivity plc Quarterly Report for Q1 Ended Dec 25, 2020

Filed January 28, 2021For Securities:TEL

Summary

TE Connectivity Ltd. (TEL) reported strong performance in its first fiscal quarter of 2021, which ended December 25, 2020. Net sales increased by 11.2% year-over-year to $3.52 billion, driven by a significant 19.1% surge in the Transportation Solutions segment, particularly in the automotive market. The Communications Solutions segment also showed robust growth of 13.9%. While the Industrial Solutions segment experienced a slight decline of 5.8%, this was largely attributed to ongoing impacts from the COVID-19 pandemic in specific sub-markets like aerospace and medical. The company demonstrated effective cost management, with selling, general, and administrative expenses decreasing slightly, and highlighted a substantial increase in restructuring and other charges, indicating strategic moves to optimize operations. Net income more than doubled year-over-year to $381 million, with diluted earnings per share rising to $1.14 from $0.08 in the prior year's comparable quarter. The company also generated strong operating cash flow of $640 million, underscoring its financial health and operational efficiency in a recovering economic environment.

Financial Highlights

51 data points
Beta

Revenue

$3.52B

32.5% Gross Margin

Net Income

$381.00M

10.8% Net Margin

EPS (Diluted)

$1.14

Total Assets

$20.27B

Cash & Equivalents

$1.10B

Free Cash Flow

$498.00M

Financial Statements
Beta
Revenue$3.52B
Cost of Revenue$2.38B
Gross Profit$1.15B
SG&A Expenses$361.00M
Operating Income$448.00M
Interest Expense$15.00M
Net Income$381.00M
EPS (Basic)$1.15
EPS (Diluted)$1.14
Shares Outstanding (Basic)331.00M
Shares Outstanding (Diluted)333.00M

Key Highlights

  • 1Net sales increased 11.2% to $3.52 billion, exceeding the prior year's comparable quarter.
  • 2Transportation Solutions segment saw significant growth of 19.1%, primarily driven by the automotive market.
  • 3Communications Solutions segment experienced robust growth of 13.9%.
  • 4Net income surged to $381 million, a substantial increase from $26 million in the prior year's quarter.
  • 5Diluted earnings per share (EPS) improved to $1.14, up from $0.08 in the prior year's quarter.
  • 6Operating cash flow remained strong at $640 million.
  • 7Significant restructuring and other charges of $167 million were recorded, indicating ongoing operational optimization efforts.

Frequently Asked Questions

The 11.2% increase in net sales to $3.52 billion was primarily driven by strong performance in the Transportation Solutions segment, which grew by 19.1%, and healthy growth in the Communications Solutions segment, up 13.9%. The automotive market within the Transportation Solutions segment was a key contributor.

The COVID-19 pandemic continued to impact the business, particularly affecting the Industrial Solutions segment, with declines in markets such as aerospace, defense, oil, and gas, and medical. While the company implemented cost management measures and expects recovery in some markets later in the fiscal year, the pandemic's influence on supply chains and demand remains a factor.

The substantial increase in restructuring and other charges to $167 million from $24 million in the prior year's quarter indicates that TE Connectivity is actively undertaking significant operational efficiency initiatives, including footprint consolidation and structural improvements, partly in response to the pandemic. These actions are intended to optimize costs and position the company for future growth.

For the second quarter of fiscal 2021, TE Connectivity expects net sales of approximately $3.5 billion and diluted earnings per share from continuing operations of approximately $1.38. This outlook anticipates continued growth in Transportation and Communications Solutions, partially offset by declines in Industrial Solutions, and benefits from foreign currency exchange rates.