Slide 1: Q1 2015 Earnings and Broadband Networks Divestiture
Q1 2015 Earnings and Broadband Networks Divestiture January, 2015
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures Forward-Looking Statements This presentation contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject
Slide 3: BNS Divestiture Overview
BNS Divestiture Overview 3
Slide 4: Strategic Rationale for the Sale of BNS
Strategic Rationale for the Sale of BNS • Continues our focus on expanding leadership in connectors and sensors • $165B market, where TE has the broadest portfolio of products & solutions • Results in approximately 90% of TE's portfolio providing leading connectivity and sensor solutions • Increases
Slide 5: Transaction Highlights
Transaction Highlights • Selling BNS assets to CommScope for $3B, ~10X adjusted EBITDA Transaction • BNS represented $1.9B in FY14 revenue Value • BNS includes the Telecom, Enterprise and Wireless businesses • Expect the transaction to be neutral to EPS one year after closure Financial • BNS will be
Slide 6: Q1 2015 Results & Guidance
Q1 2015 Results & Guidance 6
Slide 7: Q1 2015 Summary
Q1 2015 Summary Strong Q1 Results • Sales $3.47B, up 4% Y/Y; Adjusted EPS up 20% to $0.98 Y/Y, a record for Q1 • Free Cash Flow $162M; Returned $259M to shareholders Harsh Environment Focus Driving Growth • Harsh environment revenue up 10% versus prior year TEOA Delivering Strong Margins • 34.6% adj
Slide 8: Transportation Solutions
Transportation Solutions $ in Millions Revenue Business Performance Actual Y/Y Growth Rates Actual Organic Up 12% Automotive $1,227 3% 8% 1,440 1,612 Organic Commercial $206 3% 7% Transportation Up 8% Q1 2014 Q1 2015 Sensors $179 273% 7%* Actual Organic Transportation $1,612 12% 8% Solutions Orders
Slide 9: Industrial Solutions
Industrial Solutions $ in Millions Revenue Business Performance Actual Y/Y Growth Rates Actual Organic Up 3% Industrial $311 (3)% Flat Equipment 763 784 Organic Aerospace, Defense, Oil & 292 18% 8% Up 3% Q1 2014 Q1 2015 Gas Actual Organic Energy 181 (6)% 1% Orders $818 1% 1% Industrial $784 3% 3% So
Slide 10: Network Solutions
Network Solutions $ in Millions Revenue Business Performance Actual Y/Y Growth Rates Actual Organic Down 1% Broadband Networks 713 704 $417 (10)% (6)% (Telecom & Organic Enterprise) Up 2% Q1 2014 Q1 2015 Data 153 (7)% (4)% Communications Actual Organic Subsea Orders $863 19% 23% 134 57% 57% Communic
Slide 11: Consumer Solutions
Consumer Solutions $ in Millions Revenue Business Performance Actual Y/Y Growth Rates Actual Organic Down 11% Consumer $208 (20)% (17)% Devices 410 366 Organic Appliances 158 4% 7% Down 9% Q1 2014 Q1 2015 Consumer Solutions $366 (11)% (9)% Actual Organic Orders $363 (12)% (10)% • Continued strong pe
Slide 12: Q1 Financial Summary
Q1 Financial Summary ($ in Millions, except per share amounts) Q1 FY14 Q1 FY15 Net Sales $ 3,326 $ 3,466 Operating Income $ 479 $ 477 Acquisition Related Charges - 51 Restructuring & Other Charges, net 7 27 Adjusted Operating Income $ 486 $ 555 Operating Margin 14.4% 13.8% Adjusted Operating Margin
Slide 13: TE Operating Advantage (TEOA)
TE Operating Advantage (TEOA) $ in Millions Adjusted Gross Margin Percentage Adjusted Operating Margin 20.0 33.6 34.6 14.6 % 16.0% % % % Q1 2014 Q1 2015 Q1 2014 Q1 2015 Free Cash Flow • Adjusted Gross Margin increases 100bps with productivity gains from TEOA initiatives and leverage on additional vo
Slide 14: Q2 Outlook (Includes BNS)
Q2 Outlook* (Includes BNS) Revenue Guidance Highlights Transportation Up Mid Single Digits • Continued strong performance in Transportation, with Solutions Up Mid Single Digits Organic growth well in excess of 1% auto production growth • Expect continued strength in Commercial Aerospace Industrial U
Slide 15: FY15 Outlook (Includes BNS)
FY15 Outlook* (Includes BNS) Revenue Guidance Highlights • Expect harsh revenue growth as strong momentum Transportation Up High Single Digits continues in Automotive, Commercial Transportation, Solutions Up Mid Single Digits Organic Aerospace, Industrial Equipment, and Appliances • Transportation g
Slide 16: TE Connectivity, Going Forward
TE Connectivity, Going Forward 16
Slide 17: World Leader Enabling Connectivity
World Leader Enabling Connectivity Today’s products are SAFER, GREENER, SMARTER AND MORE CONNECTED. These megatrends are driving the demand for electronics and more TE products. $165 BILLION Connectivity and Sensor Market Unmatched Connectivity and Sensor Portfolio Increased focus on Harsh environme
Slide 18: Examples of TE's Content Growth
Examples of TE’s Content Growth Automotive – Megatrends of safe, green, and connected driving 4-6% TE content growth/year Sensors – Adds $80 billion to addressable market • Automotive content opportunity doubles from an average of $200 to $400 per vehicle with sensors Aerospace – New aircraft platfo
Slide 19: Increasing Revenue from Harsh Environments
Increasing Revenue from Harsh LEADER IN HARSH ENVIRONMENTS High pressure Vibration High-voltage Moisture • TE products withstand harsh High/Low REVENUE environments where failure is UP TO: Temperature not an option • Strong margins and revenue growth of 10% YOY 80% Demands excellence in engineering
Slide 20: The World Leader in Connectivity & Sensors
The World Leader in Connectivity & Sensors Commercial Transportation Automotive Aerospace & Defense Energy SubCom Medical Oil & Gas Data Communications Industrial Equipment Appliances Consumer Devices If Data, Power, or Signal Moves Through It 20 TE Connects AND Senses It
Slide 21: Appendix
Appendix 21
Slide 22: Q1 Balance Sheet & Cash Flow Summary
Q1 Balance Sheet & Cash Flow Summary Free Cash Flow and Working Capital Liquidity, Cash & Debt ($ in Millions) Q1 2015 Q1 2014 Liquidity Summary ($ in Millions) Q1 2015 Q1 2014 Cash from Continuing Operations $295 $387 Capital expenditures, net (137) (121) Beginning Cash Balance $2,457 $1,403 Pre se
Slide 23: Non-GAAP Measures
Non-GAAP Measures “Organic Sales Growth,” “Adjusted Gross Margin,” “Adjusted Gross Margin Percentage,”, “Adjusted EBITDA,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Other Income, Net,” “Adjusted Income Tax Expense,” “Adjusted Effective Tax Rate,” ”Adjusted Income from Conti
Slide 24: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) We present effective income tax rate after adjusting for the tax effect of special items including charges related to restructuring and other charges, acquisition related charges, impairment charges, other income or charges, and certain significant special tax items, if any
Slide 25: Segment Summary
Segment Summary Q1 FY2015 ($ in millions) Net Sales Adjusted Actual O rganic O perating Segment Q 1 FY15 Q 1 FY14 Growth Growth (1) Margin (1) Transportation Solutions $ 1,612 $ 1,440 11.9 % 7.9 % 21.4 % Industrial Solutions 784 763 2.8 2.7 12.9 Network Solutions 704 713 (1.3) 1.9 8.8 Consumer Solut
Slide 26: Reconciliation of Net Sales Growth– Q1 15 vs. Q1 14
Reconciliation of Net Sales Growth– Q1 15 vs. Q1 14 Pe rce ntage of Se gme nt's Total C hange in Ne t Sale s for the Q uarte r Ende d De ce mbe r 26, 2014 Ne t Sale s for the ve rsus Ne t Sale s for the Q uarte r Ende d De ce mbe r 27, 2013 Q uarte r Ende d (1) (2) O rganic Translation Acquisitions
Slide 27: Reconciliation of Net Sales Growth by Segment and Geography
Reconciliation of Net Sales Growth by Segment and Geography – Q1 15 vs. Q1 14 C hange in Ne t Sale s for the Q uarte r Ende d De ce mbe r 26, 2014 ve rsus Ne t Sale s for the Q uarte r Ende d De ce mbe r 27, 2013 O rganic (1) Translation (2) Acquisitions Total ($ in millions) Transportation Solution
Slide 28: Non-GAAP Reconciliation: Quarter Ended December 26, 2014
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 26, 2014 Adjustme n ts Acqui si ti on Re structuri n g Re l ate d and O the r Tax Adjuste d U.S. GAAP C h arge s (1) C harge s, Ne t Ite ms (2) (Non -GAAP) (3) ($ i n mi l l i on s, e xce pt pe r
Slide 29: Non-GAAP Reconciliation: Quarter Ended December 27, 2013
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 27, 2013 Adjustme nts Re stru ctu ri ng and O the r Tax Adjuste d U.S. GAAP C h arge s, Ne t Ite ms (1) (Non-GAAP) (2) ($ i n mil li ons, e xce pt pe r share data) Operating Income: Transportation
Slide 30: Non-GAAP Reconciliation: Quarter Ended March 28, 2014
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 28, 2014 Adjustme nts Acquisition Re structuring Re late d and O the r Tax Adjuste d U.S. GAAP C harge s C harge s, Ne t Ite ms (1) (Non-GAAP) (2) ($ in millions, e xce pt pe r share data) Operating
Slide 31: Non-GAAP Reconciliation: Year Ended September 26, 2014
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 26, 2014 Adjustme nts Acquisition Re structuring Re late d and O the r Tax Adjuste d U.S. GAAP C harge s (1) C harge s, Ne t Ite ms (2) (Non-GAAP) (3) ($ in millions, e xce pt pe r share data) Opera
Slide 32: Reconciliation of Gross Margin & Gross Margin Percentage
Reconciliation of Gross Margin & Gross Margin Percentage For the Q uarte rs Ende d De ce mbe r 27, De ce mbe r 26, 2013 2014 ($ in millions) Net Sales $ 3,326 $ 3,466 Cost of Sales 2,209 2,295 Gross Margin 1,117 1,171 Gross Margin Percentage 33.6% 33.8% Acquisition Related Charges - 27 (1) Adjusted
Slide 33: Reconciliation of Forward-Looking Non-GAAP Financial Measures
Reconciliation of Forward-Looking Non-GAAP Financial Measures to Forward-Looking GAAP Financial Measures O utlook for Q uarter Ending March 27, O utlook for 2015 Fiscal 2015 Diliuted earnings per share from continuing operations attributable to TE Connectivity Ltd. (GAAP) $0.89 - 0.93 $4.04 - 4.34 R