10-QPeriod: Q1 FY2022

TE Connectivity plc Quarterly Report for Q1 Ended Dec 24, 2021

Filed January 28, 2022For Securities:TEL

Summary

TE Connectivity plc reported strong performance for the first quarter of fiscal year 2022, with net sales increasing by 8.4% to $3.82 billion compared to the prior year period. This growth was driven by robust organic sales increases of 8.0%, primarily in the Industrial Solutions and Communications Solutions segments, which saw significant rises of 21.3% and 41.4%, respectively. Despite a slight dip in the Transportation Solutions segment, the company demonstrated effective operational management, leading to a substantial increase in operating income by 50.5% to $672 million. Diluted earnings per share also saw a significant increase to $1.72, up from $1.14 in the prior year's comparable quarter, reflecting improved profitability and operational efficiency.

Financial Highlights

51 data points
Beta

Revenue

$3.82B

32.2% Gross Margin

Net Income

$566.00M

14.8% Net Margin

EPS (Diluted)

$1.72

Total Assets

$21.41B

Cash & Equivalents

$982.00M

Free Cash Flow

$360.00M

Financial Statements
Beta
Revenue$3.82B
Cost of Revenue$2.59B
Gross Profit$1.23B
SG&A Expenses$363.00M
Operating Income$672.00M
Interest Expense$12.00M
Net Income$566.00M
EPS (Basic)$1.73
EPS (Diluted)$1.72
Shares Outstanding (Basic)327.00M
Shares Outstanding (Diluted)330.00M

Key Highlights

  • 1Net sales increased by 8.4% to $3.82 billion in Q1 FY22, driven by strong organic growth.
  • 2Operating income significantly increased by 50.5% to $672 million, with operating margin improving to 17.6% from 12.7% YoY.
  • 3Diluted EPS rose to $1.72 from $1.14 in the prior year quarter, indicating enhanced profitability.
  • 4Industrial Solutions and Communications Solutions segments experienced strong double-digit sales growth (21.3% and 41.4% respectively).
  • 5Gross margin remained strong at 32.2%, though slightly down from 32.5% YoY, influenced by higher material costs.
  • 6The company actively managed its capital structure, with $1.3 billion remaining under its share repurchase authorization and consistent dividend payments.
  • 7Despite ongoing macroeconomic challenges and supply chain pressures, the company provided a positive outlook for Q2 FY22, expecting net sales around $3.8 billion.

Frequently Asked Questions

TE Connectivity reported a 8.4% increase in net sales, reaching $3.82 billion for the quarter ended December 24, 2021, compared to $3.52 billion in the same period of fiscal year 2021. This growth was largely driven by an 8.0% increase in organic net sales.

Profitability improved significantly, with operating income rising by 50.5% to $672 million and diluted earnings per share increasing to $1.72 from $1.14 year-over-year. This was supported by strong sales growth in key segments, effective cost management, and the positive impact of pricing actions, partially offset by increased material costs.

The Industrial Solutions segment saw a substantial 21.3% increase in net sales, and the Communications Solutions segment experienced even stronger growth of 41.4%. The Transportation Solutions segment saw a slight decline of 3.0%, primarily due to a slowdown in the automotive end market, but this was offset by growth in commercial transportation and sensors within that segment.

TE Connectivity expects net sales for the second quarter of fiscal year 2022 to be approximately $3.8 billion. The company anticipates diluted earnings per share from continuing operations to be around $1.52. This outlook considers anticipated sales growth in Industrial and Communications Solutions, partially offset by an expected decline in Transportation Solutions, and the negative impact of foreign currency exchange rates.