TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal first quarter that ended December 30, 2016.
First Quarter Highlights
- Net sales were $3.1 billion, up 8 percent and 7 percent organically, compared to the first quarter of 2016
- Orders, excluding SubCom, were $3.1 billion in the quarter, up 10 percent organically from the first quarter of 2016
- Diluted earnings per share from continuing operations were $1.13, a 36 percent improvement year over year
- Adjusted earnings per share were $1.15, up 37 percent over the same period in 2016
- Cash flow from continuing operating activities was $404 million, with free cash flow of $218 million, and $234 million returned to shareholders
- Announced CEO succession plan with Terrence Curtin to succeed Tom Lynch as CEO following the company’s annual general meeting of shareholders; Lynch will continue as executive chairman of the board
First Quarter Results
For the first quarter, the company reported net sales of $3.1 billion, with organic sales growth of 7 percent year-over-year. Diluted earnings per share (EPS) from continuing operations (GAAP EPS) were $1.13 and adjusted EPS were $1.15, both record first quarter results for the company. Cash flow from continuing operating activities was $404 million, and free cash flow was $218 million. The company returned $234 million to shareholders in the quarter through dividends and share repurchases. Excluding the company’s SubCom business, total orders were $3.1 billion, up 10 percent organically from the first quarter of 2016, and the book-to-bill ratio was 1.06.
“We had a great start to the fiscal year,” said TE Connectivity Chairman and CEO Tom Lynch. “Organically, sales grew 7 percent over the prior year driven by double digit growth in our Automotive, Commercial Transportation and Appliances business units; improvement in our Data and Devices business and strength in Asia. Our profitability reached a record in the quarter due to higher sales volume particularly in our harsh environment businesses, continued execution of the TE Operating Advantage and the benefit of previously enacted cost reductions.
“We are raising our organic sales and EPS guidance for the full year, reflecting organic growth in all of our segments, continued benefits from our TE Operating Advantage program, and momentum in our acquired businesses. As I approach my upcoming transition from CEO to executive chairman in March, I’m proud of all we’ve accomplished and excited to have Terrence take the company forward to an even brighter future.”
2017 Outlook
For the fiscal second quarter 2017, the company expects net sales of $3.025 billion to $3.125 billion, reflecting an increase of 4 percent year over year at the midpoint. GAAP EPS are expected to be $0.97 to $1.01, including net restructuring, acquisition-related and other charges of $0.08. TE expects adjusted EPS of $1.05 to $1.09 which represents a 19 percent improvement at the mid-point versus the second quarter of 2016.
For the full year, the company expects net sales of $12.2 to $12.6 billion, reflecting 3 percent actual and 4 percent organic growth at the mid-point versus the prior year, excluding the additional week in fiscal year 2016. GAAP EPS are expected to be $4.04 to $4.24 including restructuring, acquisition-related and other charges of $0.34 and a tax-related benefit of $0.08. TE expects adjusted EPS of $4.30 to $4.50, reflecting 11 percent growth at the mid-point compared to 2016, when excluding the additional week.
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.
Chief Executive Officer Transition
On October 3, 2016, the company announced that its board of directors appointed Terrence Curtin to succeed Tom Lynch as the company’s chief executive officer, following the company’s annual general meeting of shareholders. Upon completion of the transition, Lynch will continue as executive chairman of the board.
Conference Call and Webcast
The company will hold a conference call today beginning at 8:30 a.m. ET. The dial-in information is provided here:
At TE Connectivity’s website: http://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) 230-1059, and for international callers, the dial-in number is (612) 234-9959.
An audio replay of the conference call will be available beginning at 10:30 a.m. ET on January 25, 2017, and ending at 11:59 p.m. ET on February 1, 2017. The dial-in number for participants in the United States is (800) 475-6701. For participants outside the United States, the dial-in number is (320) 365-3844. The replay access code for all callers is 414794.
