TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal second quarter that ended March 31, 2017.
Second Quarter Highlights
- Net sales were $3.2 billion, up 9 percent overall and 8 percent organically, from second quarter of 2016;
- Orders were $3.4 billion, up 20 percent organically from the prior year, with a book-to-bill ratio of 1.04;
- Diluted earnings per share from continuing operations were $1.13, up 7 percent from second quarter 2016;
- Adjusted earnings per share were $1.19, up 32 percent over the same period in 2016;
- Cash flow from continuing operating activities was $521 million, with free cash flow of $387 million, and $234 million returned to shareholders.
Second Quarter Results
For the second quarter, the company reported net sales of $3.2 billion, with organic sales growth of 8 percent year-over-year. Diluted earnings per share (EPS) from continuing operations (GAAP EPS) were $1.13 and adjusted EPS were $1.19, both record second quarter results for the company. Cash flow from continuing operating activities was $521 million, and free cash flow was $387 million. The company returned $234 million to shareholders in the quarter through dividends and share repurchases. Orders for the quarter totaled $3.4 billion, up 20 percent organically from the prior year. Excluding the company’s SubCom business, which saw significant year-over-year order growth in the quarter due to program timing, second quarter orders grew 15 percent organically over 2016.
“We are very pleased with our strong second quarter performance, which reflects broad strength across all businesses and regions, continued progress on our strategic priorities, and execution by our teams around the world.” said TE Connectivity Chief Executive Officer Terrence Curtin. “Our results – including organic sales growth of 8 percent and record earnings – were above our prior guidance and driven by adjusted operating margin expansion in our Industrial and Communications segments.
“We are raising our full-year guidance due to our strong performance and expected organic growth across all of our segments. For the full fiscal year, we expect organic sales growth of 6 percent and adjusted earnings per share of $4.62 at the midpoint, a 17 percent increase over last year. This guidance reflects the benefits of our global market leadership, a portfolio focused on harsh environment applications and confidence in our teams as they execute against our business model.”
2017 Outlook
For the fiscal third quarter of 2017, the company expects net sales of $3.2 billion to $3.3 billion, reflecting an increase of 4 percent on an as reported basis and 5 percent organically, year over year at the midpoint. GAAP EPS are expected to be $1.08 to $1.12, including net restructuring, acquisition-related and other charges of $0.06. TE expects adjusted EPS of $1.14 to $1.18 which represents a 7 percent improvement at the mid-point versus the third quarter of 2016.
For the full year, the company expects net sales of $12.6 to $12.8 billion, reflecting 6 percent growth at the mid-point versus the prior year, excluding the additional week in fiscal year 2016. GAAP EPS are expected to be $4.39 to $4.47 including net restructuring, acquisition-related and other charges of $0.33 and a tax related benefit of $0.14. TE expects adjusted EPS of $4.58 to $4.66, reflecting 17 percent growth at the mid-point compared to 2016, when excluding the additional week.
Information about TE Connectivity’s use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables.
Chief Executive Officer Transition
In early March 2017, Terrence Curtin succeeded Tom Lynch as the company’s chief executive officer, following the company’s annual general meeting of shareholders. Lynch is continuing as executive chairman of TE’s board of directors.
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) 234-9960.
An audio replay of the conference call will be available beginning at 10:30 a.m. ET on April 26, 2017, and ending at 11:59 p.m. ET on May 3, 2017. 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 421540.
