Year-over-year EPS growth driven by significant margin expansion; record cash flow generation.
TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal second quarter ended March 29, 2024.
Second Quarter Highlights
- Net sales were $3.97 billion, in line with guidance, down 5% on a reported basis year over year and down 3% organically. Sequentially, sales grew 4% on a reported basis and 3% organically.
- GAAP diluted earnings per share (EPS) from continuing operations were $1.75, and adjusted EPS exceeded guidance at $1.86, up 13% year over year.
- Orders were $4.0 billion, up 6% sequentially, with sequential growth in all segments.
- Operating margins were 17.4% and adjusted operating margins were 18.5%, up 250 basis points year over year, driven by strong operational performance.
- Generated record cash flow in the first half of the fiscal year.
- Cash from operating activities was $1.4 billion, up 18% year over year.
- Free cash flow was $1.1 billion, up 32% year over year.
- Deployed over $1.5 billion of capital year to date, with approximately $1.2 billion returned to shareholders and approximately $350 million used for the bolt-on acquisition of Schaffner.
- Issued Connecting Our World report highlighting a 72% reduction in Scope 1 and 2 greenhouse gas emissions over the past three years; set Scope 3 reduction targets validated by the Science Based Targets initiative.
“Our teams delivered EPS above our guidance this quarter with double-digit earnings growth driven by margin expansion in all three of our segments, while continuing to navigate a dynamic global market environment. I am pleased that our orders improved sequentially across all segments and our cash generation model resulted in strong first-half free cash flow, which was up 32% year over year and set a company record,” said TE Connectivity CEO Terrence Curtin. “Building upon our performance this quarter, we expect to deliver strong earnings growth and margin expansion both in the third quarter and for the full fiscal year. We continue to invest in key mega trends, including hybrid and electric vehicles, renewable energy and artificial intelligence, where our global position and industry-leading innovations are helping our customers advance their technology while driving our long-term profitable growth.”
Third Quarter FY24 Outlook
For the third quarter of fiscal 2024, the company expects net sales of approximately $4.0 billion. GAAP EPS from continuing operations are expected to be approximately $1.71, up 2% year over year, with adjusted EPS of approximately $1.85, up 5% year over year. Third quarter guidance includes a $0.15 year-over-year headwind from tax and currency exchange rates.
Information about TE Connectivity’s use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables.
Conference Call and Webcast
The company will hold a conference call for investors today beginning at 8:30 a.m. ET. The conference call may be accessed in the following ways:
- At TE Connectivity’s website: investors.te.com
- By telephone: For both “listen-only” participants and those participants who wish to take part in the question-and-answer portion of the call, the dial-in number in the United States is (800) 715-9871 and for international callers, the dial-in number is (646) 307-1963
- A replay of the conference call will be available on TE Connectivity’s investor website at investors.te.com at 11:30 a.m. ETon April 24, 2024.
