TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter and year ended September 30, 2016.
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Fourth Quarter Highlights
- Net sales were $3.3 billion
- Diluted earnings per share (EPS) from continuing operations were $1.22
- Adjusted EPS were $1.27, above the high end of the guidance range
- Cash flow from continuing operating activities was strong at $782 million and free cash flow was a record for the company at $594 million
Full Year Highlights
- Net sales were $12.2 billion
- Diluted EPS from continuing operations (GAAP EPS) were $5.26
- Adjusted EPS were $4.08, up 13 percent versus the prior year
- Cash flow from continuing operating activities was $2 billion; free cash flow was $1.6 billion
- $3.1 billion returned to shareholders through dividends and share repurchases
- Strengthened harsh environment portfolio with acquisitions in interventional medical (Creganna), industrial connectors (Intercontec), and automotive sensors (Jaquet)
- Strong performance and momentum in the SubCom business, with $1 billion of backlog
Fourth Quarter Results
For the fourth quarter, the company reported net sales of $3.3 billion, with diluted EPS from continuing operations (GAAP EPS) of $1.22. Adjusted EPS were $1.27, cash flow from continuing operating activities was strong at $782 million, and free cash flow was a record for the company at $594 million. Excluding SubCom, total orders were $3.2 billion and the book-to-bill ratio was 1.03. All metrics include the impact of an additional week in the fourth quarter.
“The fourth quarter was a strong finish to a solid year for TE, despite a challenging macro environment,” said TE Connectivity Chairman and CEO Tom Lynch. “Our performance was led by strength in several businesses including Automotive, Commercial Transportation, SubCom, Aerospace and Defense, and Energy. We continued to build our harsh environment portfolio with the acquisition of Intercontec, which expanded our product range in the industrial equipment market. Our SubCom business continued its momentum by being awarded a contract in October for the Pacific Light Cable Network, a trans-pacific cable installation for Google and Facebook.”
Full Year Results
For the full year, the company reported net sales of $12.2 billion and diluted EPS from continuing operations (GAAP EPS) of $5.26. Adjusted EPS were $4.08, cash flow from continuing operating activities was $2 billion and free cash flow was $1.6 billion for the year. All metrics include the impact of an additional week in the fourth quarter.
“Our strategy to focus on harsh environment applications and our strong execution delivered solid results for the full fiscal year,” said Lynch. “At a segment level, results were driven by excellent performance in our Transportation Solutions segment and a solid second half of the year in our Industrial Solutions and Communications Solutions segments. We also continued our disciplined capital allocation strategy, returning $3.1 billion to shareholders.”
2017 Outlook
For the fiscal first quarter 2017, the company expects net sales of $2.95 billion to $3.05 billion, reflecting an increase of 6 percent on an actual basis and 3 percent on an organic basis year over year at the mid-point. GAAP EPS are expected to be $0.84 to $0.88, including net restructuring, acquisition-related and other charges of $0.14. TE expects adjusted EPS of $0.98 to $1.02 which represents a 19 percent improvement at the mid-point versus the first quarter of 2016.
For the full year, the company expects net sales of $12.3 to $12.9 billion, reflecting 5 percent actual and 3 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 $3.84 to $4.14, including net restructuring, acquisition-related and other charges of $0.35. TE expects adjusted EPS of $4.19 to $4.49, reflecting 10 percent growth at the mid-point compared to 2016, when excluding the additional week.
“These are exciting times for TE, and we have never been better positioned to capitalize on the strong underlying trends of a safer, greener, smarter and more connected world,” said Lynch. “We expect a good start to fiscal 2017 due to strong order momentum in the fourth quarter of 2016. Our guidance for 2017 implies 5 percent growth in sales, and another year of double-digit improvement in adjusted EPS.”
Information about TE Connectivity’s use of non-GAAP financial measures is provided below. For a reconciliation 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, effective March 9, 2017. 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) 332-0107.
- An audio replay of the conference call will be available beginning at 10:30 a.m. ET on November 2, 2016, and ending at 11:59 p.m. ET on November 9, 2016. 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 403245.
