Slide 1: Q3 2015 Earnings July 22, 2015
Q3 2015 Earnings July 22, 2015
Slide 2: Forward-Looking Statements
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 to risks, uncertainty and changes in circumstanc
Slide 3: Q3 2015 Summary: Solid earnings for the quarter
Solid earnings for the quarter Sales up 1% Y/Y and 4% organic to $3.12B, below guidance level $0.90 Adjusted EPS up 6% Y/Y and above the high end of guidance Free Cash Flow $391M; Returned $386M to shareholders including $252M in share buybacks Book-to-Bill of 1.0, excluding Subsea Communications Co
Slide 4: FY 2015 Summary
Strong performance in harsh businesses and SubCom FY15 organic sales guidance up 5% vs prior year Adjusted EPS range of $3.60 - $3.66, up 10% vs prior year at Mid-Point FY15 FX headwinds total $925M in sales and $0.32 in EPS vs prior year Adjusting full year Adjusted EPS guidance down $0.04 for chan
Slide 5: Transportation Solutions
Y/Y Growth Rates Actual Organic Automotive $1,221 (6)% 6% Commercial Transportation 206 (14)% (5)% Sensors 194 288% 4%* Transportation Solutions $1,621 2% 4% $ in Millions Sales TE Automotive sales up 6% organically with growth across all regions despite auto production relatively flat Softness in t
Slide 6: Industrial Solutions
Y/Y Growth Rates Actual Organic Industrial Equipment $345 (1)% 1% Aerospace, Defense, Oil & Gas 279 (4)% (5)% Energy 182 (13)% -% Industrial Solutions $806 (5)% (1)% $ in Millions Sales Industrial markets mixed; Growth in Europe offset by weakness in US; China growth lower than expected Continued st
Slide 7: Communications Solutions
Y/Y Growth Rates Actual Organic Data & Devices $328 (20)% (16)% Appliances 161 (9)% (3)% SubCom 202 288% 288% Communications Solutions $691 8% 12% $ in Millions Sales Continued momentum in SubCom with new $400M NCP program coming into force Appliances impacted by weakness in Asia, particularly China
Slide 8: Q3 Financial Summary
Organic Sales Growth, Adjusted Operating Income, Adjusted Operating Margin, Adjusted EPS and Adjusted EPS in Constant Currency are non-GAAP measures; see Appendix for description and reconciliation. ($ in Millions, except per share amounts) Q3 FY14 Q3 FY15 Net Sales $ 3,075 $ 3,118 Operating Income
Slide 9: Gross Margin, Operating Margin and Free Cash Flow
$ in Millions Adjusted Gross Margin Percentage Adjusted Gross Margin increases 50 bps driven by strong productivity Adjusted Operating Margin expansion driven by TEOA initiatives, restructuring savings and additional volume FCF impacted by timing of tax payments Adjusted Operating Margin Free Cash F
Slide 10: Q4 2015 Sales and Adjusted EPS Guidance
Sales Guidance Sales Up 3% Organically, with 17% Adjusted EPS Growth Y/Y in Constant Currency Transportation Solutions Industrial Solutions Communications Solutions TE Connectivity Highlights Sales $3.02B to $3.18B Adjusted EPS $0.90 to $0.96 Sales up 1% and up 3% organic Y/Y at midpoint Sales growt
Slide 11: FY 2015 Guidance
Sales Up 5% Organically, with 19% Adjusted EPS Growth Y/Y in Constant Currency Sales of $12.28B - $12.42B Adjusted EPS of $3.60 - $3.66 Sales up 3% at midpoint, up 5% organic at midpoint FX impacting sales by ~$925M Y/Y Adjusted EPS up 10% at midpoint, with ~$0.32 FX headwind Automotive growth expec
Slide 12: Additional Information
Additional Information 12
Slide 13: Y/Y Q3 2015 Continuing Ops Performance
Y/Y Q3 2015 Continuing Ops Performance (in millions except per share amounts) 13 Sales Adjusted EPS Q3 2014 Results (Previously Reported) $3,580 $1.00 Discontinued Operations (505) (0.15) Q3 2014 Results (Recast in March 23, 2015 Form 8-K) $3,075 $0.85 FX Impact (296)* (0.10) Operational Performance
Slide 14: Y/Y FY15 Expected Performance
Y/Y FY15 Expected Performance (in millions except per share amounts) 14 Sales Adjusted EPS FY14 Results (Previously Reported) $13,912 $3.79 Discontinued Operations (1,939) (0.48) FY14 Results (Recast in March 23, 2015 Form 8-K) $11,973 $3.31 FX Impact (925) (0.32) Operational Performance 1,302 0.64
Slide 15: Q3 Balance Sheet & Cash Flow
Liquidity Summary ($ in Millions) Q3 2015 Q3 2014 Beginning Cash Balance $697 $1,429 Free Cash Flow 391 442 Dividends (134) (119) Share repurchases (226) (60) Proceeds from exercise of share options 9 31 Repayment of Commercial Paper (105) - Pre-separation tax (payments) receipts, net 3 (200) Other
Slide 16: Appendix
Appendix 16
Slide 17: Non-GAAP Measures
Non-GAAP Measures “Organic Sales Growth,” “Adjusted Gross Margin,” “Adjusted Gross Margin Percentage,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Other Income, Net,” “Adjusted Income Tax Expense,” “Adjusted Effective Tax Rate,” ”Adjusted Income from Continuing Operations,” “
Slide 18: Non-GAAP Measure Descriptions
Adjusted Income from Continuing Operations – represents income from continuing operations attributable to TE Connectivity Ltd. (the most comparable GAAP measure) before special items including charges or income related to restructuring and other charges, acquisition related charges, impairment charg
Slide 19: Segment Summary Q3 FY2015
Segment Summary Q3 FY2015 19 Adjusted Operating Y/Y Actual Y/Y Organic Margin for the June 26, June 27, Sales Sales Quarter Ended Segment 2015 2014 Growth Growth (1) June 26, 2015 (1) Transportation Solutions 1,621 $ 1,586 $ 2.2 % 3.9 % 19.6 % Industrial Solutions 806 849 (5.1) (1.3) 13.5 Communicat
Slide 20: Reconciliation of Net Sales Growth – Q3 vs. Q3
Reconciliation of Net Sales Growth– Q3 15 vs. Q3 14 20 Translation (2) Acquisitions Transportation Solutions (3) : Automotive 73 $ 5.7 % (149) $ - $ (76) $ (5.9) % 75 % Commercial Transportation (13) (5.2) (20) - (33) (13.8) 13 Sensors 2 4.3 (5) 147 144 288.0 12 Total 62 3.9 (174) 147 35 2.2 100 % I
Slide 21: Reconciliation of Net Sales Growth by Segment and Geography
Reconciliation of Net Sales Growth by Segment and Geography – Q3 15 vs. Q3 14 21 Translation (2) Acquisitions Transportation Solutions : EMEA 30 $ 4.5 % (128) $ 65 $ (33) $ (4.9) % Asia–Pacific 39 7.1 (28) 20 31 5.7 Americas (7) (1.9) (18) 62 37 10.1 Total 62 3.9 (174) 147 35 2.2 Industrial Solution
Slide 22: Reconciliation of Non-GAAP Measures, Quarter Ended June 26, 2015
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 26, 2015 22 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (Non-GAAP) (2) Operating Income: Transportation Solutions 303 $ 5 $ 9 $ - $ 317 $ Industri
Slide 23: Reconciliation of Non-GAAP Measures, Quarter Ended June 27, 2014
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended June 27, 2014 23 Acquisition Restructuring Related and Other Adjusted U.S. GAAP Charges Charges, Net (Non-GAAP) (1) Operating Income: Transportation Solutions 325 $ - $ - $ 325 $ Industrial Solutions 121 1
Slide 24: Reconciliation of Non-GAAP Measures, Quarter Ended September 26, 2014
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 26, 2014 24 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 297 $ 4 $ 4 $ - $ 305 $
Slide 25: Reconciliation of Non-GAAP Measures, Year Ended September 26, 2014
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 26, 2014 25 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 1,245 $ 4 $ 4 $ - $ 1,253
Slide 26: Reconciliation of Gross Margin & Gross Margin Percentage
Reconciliation of Gross Margin & Gross Margin Percentage 26 June 26, June 27, 2015 2014 Net Sales 3,118 $ 3,075 $ Cost of Sales 2,070 2,057 Gross Margin 1,048 1,018 Gross Margin Percentage 33.6% 33.1% Acquisition Related Charges 1 - Adjusted Gross Margin (1) 1,049 $ 1,018 $ Adjusted Gross Margin Per
Slide 27: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow 27 June 26, June 27, 2015 2014 Net cash provided by continuing operating activities 524 $ 402 $ Capital expenditures, net (130) (160) Payments (receipts) related to pre-separation U.S. tax matters, net (3) 200 Free cash flow (1) 391 $ 442 $ (1) See description of non
Slide 28: Reconciliation of Forward-Looking Non-GAAP Measures for Q4 and Fiscal 2015
Reconciliation of Forward-Looking Non-GAAP Financial Measures to Forward-Looking GAAP Financial Measures for Q4 2015 and Fiscal 2015 28 Outlook for the Quarter Ending September 25, Outlook for 2015 Fiscal 2015 Diluted earnings per share from continuing operations attributable to TE Connectivity Ltd.
Slide 29: Impact of Changes in Foreign Currency Exchange Rates
Impact of Changes in Foreign Currency Exchange Rates for Q3 2015, Q4 2015 and Fiscal 2015 29 For the Outlook for the Quarter Ended Quarter Ending June 26, September 25, Outlook for 2015 2015 Fiscal 2015 Adjusted diluted earnings per share from continuing operations attributable to TE Connectivity Lt