On July 24, 2024, TE Connectivity Ltd (TEL, Financial) released its 8-K filing for the fiscal third quarter ended June 28, 2024. TE Connectivity, the largest electrical connector supplier in the world, provides interconnect and sensor solutions to the transportation, industrial, and communications markets. Operating in 150 countries with over 500,000 stock-keeping units, TE Connectivity plays a crucial role in the electrical architecture of its customers' innovations.
Performance Overview
TE Connectivity Ltd (TEL, Financial) reported net sales of $3.98 billion for the third quarter, slightly below the analyst estimate of $4.01 billion. However, the company delivered an earnings per share (EPS) of $1.86, surpassing the estimated EPS of $1.80. This performance was driven by a robust operating margin expansion of 200 basis points and record year-to-date cash flow generation.
Segment Performance and Challenges
In the Transportation segment, TE Connectivity's automotive business grew 4% organically despite a decline in auto production. The Industrial segment saw three out of four businesses continue their growth trajectories. The Communications segment achieved over 20% sales growth and record orders, driven by momentum in artificial intelligence programs.
“I’m pleased that our team continued to navigate a dynamic market environment to deliver another strong quarter of performance, highlighted by operating margin expansion of 200 basis points, delivering EPS above guidance and record cash flow generation,” said TE Connectivity CEO Terrence Curtin.
Financial Achievements
TE Connectivity's financial achievements are significant for the hardware industry. The company reported a gross margin of $1.39 billion, up from $1.30 billion in the same quarter last year. Operating income increased to $755 million from $630 million, reflecting a strong operational performance.
| Metric | Q3 FY2024 | Q3 FY2023 |
|---|---|---|
| Net Sales | $3.98 billion | $3.99 billion |
| Gross Margin | $1.39 billion | $1.30 billion |
| Operating Income | $755 million | $630 million |
| EPS | $1.86 | $1.67 |
Income Statement Highlights
TE Connectivity reported a net income of $573 million for the quarter, up from $528 million in the same period last year. The company's diluted earnings per share from continuing operations were $1.86, compared to $1.67 in Q3 FY2023. The weighted-average number of shares outstanding was 308 million, down from 317 million in the previous year.
Balance Sheet and Cash Flow
As of June 28, 2024, TE Connectivity had total assets of $22.90 billion, up from $21.71 billion as of September 29, 2023. The company reported cash and cash equivalents of $1.47 billion. Net cash provided by operating activities was $1.01 billion for the quarter, compared to $779 million in the same period last year. Free cash flow for the quarter was $867 million, up from $614 million in Q3 FY2023.
Outlook
For the fourth quarter of fiscal 2024, TE Connectivity expects net sales of approximately $4.0 billion and GAAP EPS from continuing operations of approximately $1.80, up 3% year over year. Adjusted EPS is expected to be approximately $1.94, up 9% year over year.
TE Connectivity Ltd (TEL, Financial) continues to demonstrate resilience and strong performance in a dynamic market environment, positioning itself well for future growth and innovation alongside its valued customers worldwide.
Explore the complete 8-K earnings release (here) from TE Connectivity Ltd for further details.
