TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter and year ended September 25, 2015.
Fourth Quarter Highlights
- Net sales were $2.98 billion, down 3 percent versus the prior year and flat organically, and up 6 percent in constant currency
- Adjusted Earnings Per Share (EPS) from continuing operations were $0.90, up 2 percent versus the prior year and up 15 percent in constant currency
- Diluted Earnings Per Share from continuing operations (GAAP EPS) were $0.34 versus $1.48 in the prior year primarily due to tax items
- Returned $759 million to shareholders through dividends and share repurchases
Full Year Highlights
- Net sales increased to $12.2 billion, up 4 percent organically versus the prior year; up 10 percent in constant currency
- Adjusted Earnings Per Share (EPS) from continuing operations were $3.60, up 9 percent versus the prior year and up 19 percent in constant currency
- Diluted Earnings Per Share from continuing operations (GAAP EPS) were $3.01 versus $3.87 in the prior year primarily due to tax items
- Returned $1.7 billion to shareholders including $1.2 billion in share repurchases
- Strengthened portfolio with four acquisitions and Broadband Network Solutions (BNS) divestiture; established TE as a leader in the attractive sensors market; increased harsh environment businesses to 80 percent of sales.
Tom Lynch, TE Connectivity Chairman and CEO stated, “For the full year, we delivered strong performance in a challenging macro environment. Sales were up 4 percent organically, and 10 percent on a constant currency basis due to the continued strength in our Automotive, Appliances, Commercial Air, SubCom and Sensors businesses. This more than offset approximately $1 billion in unfavorable foreign exchange translation, the precipitous decline in the Oil and Gas market, and a slowdown in China during the last two quarters of the fiscal year. We expanded adjusted operating margins by 80 bps and grew adjusted EPS 19 percent on a constant currency basis for the year due to strong execution, the strength of our harsh environment portfolio and productivity improvements driven by our TE Operating Advantage (TEOA) business system.
“In fiscal year 2015, we made good progress on our strategy,” said Lynch. “We completed four acquisitions, strengthening our leadership position in harsh environment solutions and establishing a leading Sensors business. We also sold our BNS business for $3 billion and are returning the vast majority of proceeds to shareholders. We ended the year with 80 percent of our portfolio focused on harsh environment applications, and 90 percent of our sales driven by connectivity and sensor solutions.
“In fiscal year 2016, we expect sales between $12.0 and $12.8 billion, up 1 percent on an actual basis and 3 percent organically at the midpoint of the range,” said Lynch. “This guidance reflects continued growth in the majority of our harsh environment businesses for the year, offset by softness in China and several Industrial markets in the first half of the fiscal year. We expect inventories to get back in balance and China markets to return to growth in our second half. Despite this challenging environment, we expect to deliver fiscal 2016 adjusted EPS of $3.80 to $4.20, up 11 percent at the midpoint of the range.”
FISCAL FOURTH QUARTER RESULTS
The company reported net sales of $2.98 billion compared to prior year sales of $3.07 billion. Adjusted EPS were $0.90, compared to $0.88 in the prior year. GAAP EPS were $0.34, compared to $1.48 in the prior year. GAAP EPS included $228 million of tax items, acquisition related charges, and restructuring and other charges. Free cash flow was $389 million for the quarter.
Excluding SubCom, total company orders were $2.6 billion and the book-to-bill ratio was 0.95.
For the fiscal first quarter 2016, the company expects net sales of $2.7 billion to $2.9 billion, reflecting a decline of 8 percent on an actual basis and down 4 percent on an organic basis year over year at the mid-point. The company expects adjusted EPS of $0.72 to $0.80 which represents a 15 percent decline at the mid-point. GAAP EPS are expected to be $0.62 to $0.70, including restructuring and other charges of $0.08 and acquisition related charges of $0.02. This outlook includes foreign exchange headwinds, reducing expected sales by $167 million and adjusted EPS by $0.05 year over year.
For the full year, the company expects net sales of $12.0 to $12.8 billion, reflecting 1 percent actual and 3 percent organic growth versus prior year at the mid-point; and adjusted EPS of $3.80 to $4.20 reflecting double-digit growth versus the prior year. GAAP EPS are expected to be $3.61 to $4.01, including restructuring and other charges of $0.16, and acquisition related charges of $0.03. The outlook includes foreign exchange headwinds, reducing expected sales by $262 million and adjusted EPS by $0.10 year over year as well as the impact of a 53rd week.
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.
CONFERENCE CALL AND WEBCAST
The company will hold a conference call today beginning at 8:30 a.m. EDT. 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) 230-1074, 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. EDT on October 28, 2015, and ending at 11:59 p.m. EST on November 4, 2015. 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 367168.