10-QPeriod: Q3 FY2021

TE Connectivity plc Quarterly Report for Q3 Ended Jun 25, 2021

Filed July 29, 2021For Securities:TEL

Summary

TE Connectivity Ltd. (TEL) reported strong financial results for the third quarter and first nine months of fiscal year 2021, reflecting a significant recovery and growth compared to the prior year period impacted by COVID-19. Net sales surged by 50.9% in the third quarter and 24.6% for the nine-month period, driven by robust performance across all segments, particularly Transportation Solutions. The company demonstrated improved profitability, with gross margin expanding to 33.0% in the quarter and operating income significantly increasing. This performance was supported by higher volumes, improved manufacturing productivity, and favorable foreign currency translation. TE Connectivity also maintained a strong liquidity position and provided an optimistic outlook for the fourth quarter and full fiscal year 2021, expecting further sales growth and solid earnings per share.

Financial Highlights

52 data points
Beta

Revenue

$3.85B

33.0% Gross Margin

Net Income

$580.00M

15.1% Net Margin

EPS (Diluted)

$1.74

Total Assets

$21.06B

Cash & Equivalents

$1.42B

Free Cash Flow

$512.00M

Financial Statements
Beta
Revenue$3.85B
Cost of Revenue$2.58B
Gross Profit$1.27B
SG&A Expenses$366.00M
Operating Income$714.00M
Interest Expense$14.00M
Net Income$580.00M
EPS (Basic)$1.76
EPS (Diluted)$1.74
Shares Outstanding (Basic)330.00M
Shares Outstanding (Diluted)333.00M

Key Highlights

  • 1Net sales increased significantly by 50.9% year-over-year to $3.85 billion for the third quarter and by 24.6% to $11.11 billion for the first nine months of fiscal 2021.
  • 2All three segments (Transportation Solutions, Industrial Solutions, and Communications Solutions) experienced sales growth, with Transportation Solutions showing exceptional 80.5% growth in the quarter.
  • 3Gross margin improved to 33.0% in the third quarter from 27.7% in the prior year period, indicating improved operational efficiency and pricing power.
  • 4Operating income saw a substantial increase of $580 million in the third quarter and $1.58 billion for the nine-month period, reflecting the strong revenue growth and cost management.
  • 5The company repurchased $591 million of common shares in the first nine months of fiscal 2021 and had $1.9 billion remaining under its share repurchase authorization.
  • 6TE Connectivity raised its full-year 2021 outlook, expecting net sales of approximately $14.9 billion and diluted earnings per share from continuing operations of approximately $5.94.

Frequently Asked Questions

The primary driver for the significant increase in net sales was a strong recovery from the COVID-19 impacted prior year, coupled with organic net sales growth across all segments. The Transportation Solutions segment, in particular, saw substantial growth driven by increased automotive production and content gains.

Profitability significantly improved. Gross margin expanded due to higher volumes and manufacturing productivity. Operating income saw a substantial increase, reflecting the strong revenue growth and effective cost management, even with increased raw material costs like copper, gold, and silver.

TE Connectivity provided an optimistic outlook, expecting net sales of approximately $3.8 billion for the fourth quarter of fiscal 2021 and approximately $14.9 billion for the full fiscal year. Diluted earnings per share from continuing operations are projected to be around $1.55 for the fourth quarter and $5.94 for the full year.

The company generated strong operating cash flow and maintained a healthy liquidity position. It continued to execute its share repurchase program, authorizing an additional $1.5 billion increase and having $1.9 billion remaining under the program. TE Connectivity also declared a quarterly dividend of $0.50 per share.