Slide 1: Q4 2015 Earnings
Q4 2015 Earnings October 28, 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: FY 2015 Summary
FY 2015 Summary Strong performance despite macro softness in second half • Sales of $12.2B; up 4% organically and up 10% in constant currency Y/Y • Adjusted EPS of $3.60, up 9% Y/Y; 19% Adjusted EPS growth in constant currency • FY15 FX headwinds Y/Y total $955M* in sales and $0.33 in EPS • Returned
Slide 4: Q4 2015 Summary
Q4 2015 Summary Solid performance in an uncertain macro environment • Sales down 3% Y/Y and flat organically to $2.98B • $0.90 Adjusted EPS up 2% Y/Y; 15% Adjusted EPS growth at constant currency • FX headwinds Y/Y: $274M* sales and $0.11 EPS • $3B share buyback initiated; Returned $759M to sharehol
Slide 5: Segment Orders Summary
Segment Orders Summary ($ in millions) FY15 Q1 Q2 Q3 Q4 Transportation 1,668 1,653 1,643 1,480 Q4 orders impacted by: • China deceleration • Inventory adjustments in Industrial 818 828 820 720 US Industrial markets and distribution channel Communications 515 513 469 448 Ex SubCom Total TE 3,001 2,99
Slide 6: Transportation Solutions
Transportation Solutions $ in Millions Sales Business Performance Actual Y/Y Growth Rates Actual Organic Up 1% Automotive $1,132 (8)% 3% $1,493 $1,508 Organic Commercial 187 (12)% (4)% Transportation Up 2% Q4 2014 Q4 2015 Sensors 189 264% N/M Actual Organic Transportation $1,508 1% 2% Solutions Orde
Slide 7: Industrial Solutions
Industrial Solutions $ in Millions Sales Business Performance Actual Y/Y Growth Rates Actual Organic Down 12% Industrial $343 (6)% (3)% $901 Equipment $792 Organic Aerospace, 276 (16)% (11)% Defense, Oil & Gas Down 7% Q4 2014 Q4 2015 Energy 173 (18)% (5)% Actual Organic Industrial $792 (12)% (7)% Or
Slide 8: Communications Solutions
Communications Solutions $ in Millions Sales Business Performance Actual Y/Y Growth Rates Actual Organic Up 1% SubCom $202 135% 135% $678 $684 Data & Devices 323 (24)% (20)% Organic Appliances 159 (5)% 1% Up 5% Q4 2014 Q4 2015 Communications $684 1% 5% Actual Organic Solutions Orders $459 (38)% (34)
Slide 9: Q4 Financial Summary
Q4 Financial Summary ($ in Millions, except per share amounts) Q4 FY14 Q4 FY15 Net Sales $ 3,072 $ 2,984 Operating Income $ 451 $ 407 Acquisition Related Charges 33 11 Restructuring & Other Charges, net 4 70 Adjusted Operating Income $ 488 $ 488 Operating Margin 14.7% 13.6% Adjusted Operating Margin
Slide 10: TE Operating Advantage (TEOA)
TE Operating Advantage (TEOA) $ in Millions Adjusted Gross Margin Percentage Adjusted Operating Margin 33.1% 16.4% 16.0% 32.5% 15.9% Q4 2014 Q4 2015 Q4 2014 Q4 2015 Free Cash Flow • Adjusted Gross Margin impacted by reduced sales from higher margin businesses and the distribution channel • Adjusted
Slide 11: Q1 Outlook
Q1 Outlook Guidance* Highlights • Automotive expected to be down slightly organically on 2% production decline; Growth in US and Europe offset Transportation Down High Single Digits by declines in China and South America; Commercial Solutions Down Low Single Digits Organic Transportation remains wea
Slide 12: FY16 Outlook
FY16 Outlook Guidance* Highlights • Automotive outperforming the market: 3-5% organic growth on flat global auto production growth; offsetting Transportation continued weak Commercial Transportation Up Mid Single Digits Solutions Up Mid Single Digits Organic • Expect strong Y/Y organic Sensors growt
Slide 13: Additional Information
Additional Information 13
Slide 14: Y/Y Q4 2015 Results
Y/Y Q4 2015 Results Sales Adjusted (in millions) EPS Q4 2014 Results $3,072 $0.88 (Recast in March 23, 2015 Form 8-K) FX Impact (274)* (0.11) Operational Performance 186 0.13 Q4 2015 Results $2,984 $0.90 Adjusted EPS is a non-GAAP measure; See Appendix for description and reconciliation. * Includes
Slide 15: Y/Y FY15 Results
Y/Y FY15 Results Sales Adjusted (in millions) EPS FY14 Results $11,973 $3.31 (Recast in March 23, 2015 Form 8-K) FX Impact (955)* (0.33) Operational Performance 1,215 0.62 FY15 Results $12,233 $3.60 Adjusted EPS is a non-GAAP measure; See Appendix for description and reconciliation. * Includes $46M
Slide 16: Y/Y Q1 2016 Sales and Adjusted EPS
Y/Y Q1 2016 Sales Adjusted (in millions) EPS Q1 2015 Results $3,049 $0.89 (Recast in March 23, 2015 Form 8-K) FX Impact (167) (0.05) Operational Performance (82) (0.08) Q1 2016 Guidance $2,800 $0.76 Adjusted EPS is a non-GAAP measure; See Appendix for description and reconciliation. Guidance Range S
Slide 17: Y/Y 2016 Sales and Adjusted EPS
Y/Y 2016 Sales Adjusted (in millions) EPS 2015 Results $12,233 $3.60 FX Impact (262) (0.10) Operational Performance, 429 0.50 Including Share Buyback 2016 Guidance* $12,400 $4.00 Adjusted EPS is a non-GAAP measure; See Appendix for description and reconciliation. * 53 Week Year Guidance Range Sales
Slide 18: Q4 Balance Sheet & Cash Flow Summary
Q4 Balance Sheet & Cash Flow Summary Free Cash Flow and Working Capital Liquidity, Cash & Debt ($ in Millions) Q4 2015 Q4 2014 Liquidity Summary ($ in Millions) Q4 2015 Q4 2014 Cash from Continuing Operations $540 $662 Capital expenditures, net (168) (86) Beginning Cash Balance $701 $1,613 Pre-separ
Slide 19: Appendix
Appendix 19
Slide 20: Non-GAAP Measures
Non-GAAP Measures “Organic Sales Growth,” “Sales in Constant Currency,” “Adjusted Gross Margin,” “Adjusted Gross Margin Percentage,” “Adjusted Operating Income,” “Adjusted Operating Income in Constant Currency,” “Adjusted Operating Margin,” “Adjusted Other Income, Net,” “Adjusted Income Tax Expense,
Slide 21: Non-GAAP Measures (cont.)
Non-GAAP Measures (cont.) Adjusted Income Tax Expense – represents income tax expense (the most comparable GAAP measure) after adjusting for the tax effect of special items including charges related to restructuring and other charges, acquisition related charges, impairment charges, other income or
Slide 22: Segment Summary for the Quarter & Year Ended September 25, 2015
Segment Summary for the Quarter & Year Ended September 25, 2015 Ne t Sale s Adjuste d O pe rating For the Q uarte rs Ende d Y/Y Actual Y/Y O rganic Margin for the Se pte mbe r 25, Se pte mbe r 26, Sale s Sale s Q uarte r Ende d Segment 2015 2014 Growth Growth (1) Se ptembe r 25, 2015 (1) ($ in milli
Slide 23: Reconciliation of Net Sales Growth– Q4 15 vs. Q4 14
Reconciliation of Net Sales Growth– Q4 15 vs. Q4 14 Perce ntage of Se gme nt's Total Change in Ne t Sales for the Q uarte r Ended September 25, 2015 Net Sales for the versus Net Sale s for the Q uarter Ende d Septe mber 26, 2014 Q uarter Ende d (1) (2) O rganic Translation Acquisitions Total Septemb
Slide 24: Reconciliation of Net Sales Growth– 2015 vs. 2014
Reconciliation of Net Sales Growth– 2015 vs. 2014 Pe rce ntage of Se gme nt's Total Change in Net Sale s for the Ye ar Ende d Se pte mbe r 25, 2015 Ne t Sale s for the ve rsus Net Sales for the Ye ar Ende d Se pte mbe r 26, 2014 Ye ar Ende d O rganic (1) Translation (2) Acquisitions Total Se pte mbe
Slide 25: Reconciliation of Non-GAAP Measures, Quarter Ended September 25, 2015
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended September 25, 2015 Adjustments Acquisition Re structuring Re late d and O the r Tax Adjuste d U.S. GAAP Charge s (1) Charge s, Ne t Ite ms (2) (Non-GAAP) (3) ($ in millions, exce pt pe r share data) Operat
Slide 26: 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 Adjustme nts Acquisition Re structuring Re late d and O the r Tax Adjuste d U.S. GAAP C harge s (1) Charge s, Ne t Ite ms (2) (Non-GAAP) (3) ($ in millions, e xce pt pe r share data) Ope
Slide 27: Reconciliation of Non-GAAP Measures, Year Ended September 25, 2015
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 25, 2015 Adjustme nts Acquisition Restructuring Relate d and O the r Tax Adjusted U.S. GAAP C harge s (1) C harges, Ne t Ite ms (2) (Non-GAAP) (3) ($ in millions, exce pt pe r share data) Operating
Slide 28: 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 Adjustme nts Acquisition Restructuring Re late d and O the r Tax Adjuste d U.S. GAAP Charge s (1) Charge s, Net Ite ms (2) (Non-GAAP) (3) ($ in millions, e xce pt pe r share data) Operating
Slide 29: Reconciliation of Non-GAAP Measures, Quarter Ended December 26, 2014
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 26, 2014 Adjustments Acquisition Restructuring Related and O ther Tax Adjusted U.S. GAAP Charge s (1) Charges, Net Items (2) (Non-GAAP) (3) ($ in millions, exce pt per share data) Operating Income
Slide 30: Reconciliation of Gross Margin & Gross Margin Percentage
Reconciliation of Gross Margin & Gross Margin Percentage For the Q uarte rs Ende d For the Ye ars Ende d Se pte mbe r 25, Se pte mbe r 26, Se pte mbe r 25, Se pte mbe r 26, 2015 2014 2015 2014 ($ in millions) Net Sales $ 2,984 $ 3,072 $ 12,233 $ 11,973 Cost of Sales 2,016 2,058 8,146 8,001 Gross Mar
Slide 31: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow For the Q uarte rs Ende d For the Ye ars Ende d Se pte mbe r 25, Se pte mbe r 26, Se ptembe r 25, Se pte mbe r 26, 2015 2014 2015 2014 (in millions) Net cash provided by continuing operating activities $ 540 $ 662 $ 1,619 $ 1,804 Capital expenditures, net (168) (86)
Slide 32: Reconciliation of Forward-Looking Non-GAAP Financial Measures
Reconciliation of Forward-Looking Non-GAAP Financial Measures to Forward-Looking GAAP Financial Measures for Q1 2016 and Fiscal 2016 O utlook for Q uarte r Ending De ce mbe r 25, O utlook for 2015 Fiscal 2016 Diluted earnings per share from continuing operations attributable to TE Connectivity Ltd.
Slide 33: Impact of Changes in Foreign Currency Exchange Rates
Impact of Changes in Foreign Currency Exchange Rates for Q4 2015, Fiscal 2015, Q1 2016 and Fiscal 2016 Adjuste d O pe rating Ne t Sale s Income (1) Adjuste d EPS (1) (in millions, exce pt pe r share data) Quarter ended September 26, 2014 $ 3,072 $ 488 $ 0.88 (2) Impact of changes in foreign currency