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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 28, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

001-33260

(Commission File Number)

Graphic

TE CONNECTIVITY LTD.

(Exact name of registrant as specified in its charter)

Switzerland
(Jurisdiction of Incorporation)

98-0518048
(I.R.S. Employer Identification No.)

Mühlenstrasse 26, CH-8200 Schaffhausen, Switzerland

(Address of principal executive offices)

+41 (0)52 633 66 61

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Shares, Par Value CHF 0.57

TEL

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

The number of common shares outstanding as of July 19, 2024 was 303,918,662.

TE CONNECTIVITY LTD.

INDEX TO FORM 10-Q

   

   

   

Page

Part I.

Financial Information

Item 1.

Financial Statements

1

Condensed Consolidated Statements of Operations for the Quarters and Nine Months Ended June 28, 2024 and June 30, 2023 (unaudited)

1

Condensed Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended June 28, 2024 and June 30, 2023 (unaudited)

2

Condensed Consolidated Balance Sheets as of June 28, 2024 and September 29, 2023 (unaudited)

3

Condensed Consolidated Statements of Equity for the Quarters and Nine Months Ended June 28, 2024 and June 30, 2023 (unaudited)

4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 28, 2024 and June 30, 2023 (unaudited)

6

Notes to Condensed Consolidated Financial Statements (unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

Item 4.

Controls and Procedures

36

Part II.

Other Information

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 5.

Other Information

37

Item 6.

Exhibits

38

Signatures

39

i

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

For the

For the

Quarters Ended

Nine Months Ended

June 28,

June 30,

June 28,

June 30,

    

2024

    

2023

    

2024

    

2023

    

(in millions, except per share data)

Net sales

$

3,979

$

3,998

$

11,777

$

11,999

Cost of sales

 

2,593

 

2,699

 

7,704

 

8,229

Gross margin

 

1,386

 

1,299

 

4,073

 

3,770

Selling, general, and administrative expenses

 

431

431

 

1,299

1,258

Research, development, and engineering expenses

 

189

176

 

546

534

Acquisition and integration costs

 

5

9

 

16

26

Restructuring and other charges, net

 

6

53

 

67

283

Operating income

755

630

2,145

1,669

Interest income

20

18

61

39

Interest expense

 

(18)

(20)

 

(55)

(61)

Other expense, net

 

(3)

(4)

 

(11)

(13)

Income from continuing operations before income taxes

 

754

 

624

 

2,140

 

1,634

Income tax (expense) benefit

 

(181)

(96)

 

778

(283)

Income from continuing operations

 

573

 

528

 

2,918

 

1,351

Income (loss) from discontinued operations, net of income taxes

 

 

(1)

7

Net income

$

573

$

528

$

2,917

$

1,358

Basic earnings per share:

Income from continuing operations

$

1.87

$

1.68

$

9.47

$

4.28

Income (loss) from discontinued operations

 

 

 

 

0.02

Net income

 

1.87

 

1.68

 

9.47

 

4.30

Diluted earnings per share:

Income from continuing operations

$

1.86

$

1.67

$

9.41

$

4.25

Income (loss) from discontinued operations

 

 

 

 

0.02

Net income

 

1.86

 

1.67

 

9.41

 

4.27

Weighted-average number of shares outstanding:

Basic

 

306

315

 

308

316

Diluted

 

308

317

 

310

318

See Notes to Condensed Consolidated Financial Statements.

1

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

For the

For the

Quarters Ended

Nine Months Ended

  

June 28,

    

June 30,

    

June 28,

    

June 30,

    

    

2024

    

2023

    

2024

    

2023

    

(in millions)

Net income

$

573

$

528

$

2,917

$

1,358

Other comprehensive income (loss):

Currency translation

 

(45)

(25)

5

358

Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes

 

1

(12)

4

Gains (losses) on cash flow hedges, net of income taxes

 

15

(42)

53

65

Other comprehensive income (loss)

 

(30)

 

(66)

 

46

 

427

Comprehensive income

543

462

2,963

1,785

Less: comprehensive (income) loss attributable to noncontrolling interests

1

(1)

(1)

(12)

Comprehensive income attributable to TE Connectivity Ltd.

$

544

$

461

$

2,962

$

1,773

See Notes to Condensed Consolidated Financial Statements.

2

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

June 28,

September 29,

    

2024

    

2023

    

(in millions, except share

data)

Assets

Current assets:

Cash and cash equivalents

$

1,469

$

1,661

Accounts receivable, net of allowance for doubtful accounts of $37 and $30, respectively

 

2,889

 

2,967

Inventories

 

2,669

 

2,552

Prepaid expenses and other current assets

 

686

 

712

Total current assets

 

7,713

 

7,892

Property, plant, and equipment, net

 

3,758

 

3,754

Goodwill

 

5,664

 

5,463

Intangible assets, net

 

1,177

 

1,175

Deferred income taxes

 

3,768

 

2,600

Other assets

 

818

 

828

Total assets

$

22,898

$

21,712

Liabilities, redeemable noncontrolling interests, and shareholders' equity

Current liabilities:

Short-term debt

$

1,249

$

682

Accounts payable

 

1,662

 

1,563

Accrued and other current liabilities

 

2,206

 

2,218

Total current liabilities

 

5,117

 

4,463

Long-term debt

 

2,953

 

3,529

Long-term pension and postretirement liabilities

 

720

 

728

Deferred income taxes

 

186

 

185

Income taxes

 

386

 

365

Other liabilities

 

781

 

787

Total liabilities

 

10,143

 

10,057

Commitments and contingencies (Note 9)

Redeemable noncontrolling interests

123

104

Shareholders' equity:

Common shares, CHF 0.57 par value, 316,574,781 shares authorized and issued, and 322,470,281 shares authorized and issued, respectively

 

139

142

Accumulated earnings

 

14,253

 

12,947

Treasury shares, at cost, 12,129,385 and 10,487,742 shares, respectively

 

(1,647)

 

(1,380)

Accumulated other comprehensive loss

 

(113)

 

(158)

Total shareholders' equity

12,632

11,551

Total liabilities, redeemable noncontrolling interests, and shareholders' equity

$

22,898

$

21,712

See Notes to Condensed Consolidated Financial Statements.

3

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

For the Quarter Ended June 28, 2024

Accumulated

Other

Total

Non-

Common Shares

Treasury Shares

Contributed

Accumulated

Comprehensive

Shareholders'

controlling

Total

   

Shares

   

Amount

   

Shares

   

Amount

   

Surplus

   

Earnings

   

Loss

   

Equity

   

Interests

   

Equity

   

(in millions)

Balance at March 29, 2024

 

316

$

139

 

(10)

$

(1,295)

$

$

13,689

$

(84)

$

12,449

$

5

$

12,454

Net income

 

 

 

 

 

 

573

 

 

573

 

 

573

Other comprehensive loss

 

 

 

 

 

 

 

(29)

 

(29)

 

 

(29)

Share-based compensation expense

 

 

 

 

 

31

 

 

 

31

 

 

31

Dividends

 

 

 

 

 

 

6

 

 

6

 

 

6

Exercise of share options

 

 

 

1

 

19

 

 

 

 

19

 

 

19

Restricted share award vestings and other activity

 

 

 

 

38

 

(31)

 

(15)

 

 

(8)

 

 

(8)

Repurchase of common shares

 

 

 

(3)

 

(409)

 

 

 

 

(409)

 

 

(409)

Purchase of noncontrolling interests

(5)

(5)

Balance at June 28, 2024

316

$

139

 

(12)

$

(1,647)

$

$

14,253

$

(113)

$

12,632

$

$

12,632

For the Nine Months Ended June 28, 2024

Accumulated

Other

Total

Non-

Common Shares

Treasury Shares

Contributed

Accumulated

Comprehensive

Shareholders'

controlling

Total

   

Shares

   

Amount

   

Shares

   

Amount

   

Surplus

   

Earnings

   

Loss

   

Equity

   

Interests

   

Equity

   

(in millions)

Balance at September 29, 2023

 

322

$

142

 

(10)

$

(1,380)

$

$

12,947

$

(158)

$

11,551

$

$

11,551

Noncontrolling interests associated with acquisition

5

5

Net income

 

 

 

 

 

 

2,917

 

 

2,917

 

 

2,917

Other comprehensive income

 

 

 

 

 

 

 

45

 

45

 

 

45

Share-based compensation expense

 

 

 

 

 

100

 

 

 

100

 

 

100

Dividends

 

 

 

 

(789)

 

 

(789)

 

 

(789)

Exercise of share options

 

 

 

1

 

52

 

 

 

 

52

 

 

52

Restricted share award vestings and other activity

 

 

 

 

169

 

(100)

 

(78)

 

 

(9)

 

 

(9)

Repurchase of common shares

 

 

 

(9)

 

(1,235)

 

 

 

 

(1,235)

 

 

(1,235)

Cancellation of treasury shares

(6)

 

(3)

 

6

 

747

 

 

(744)

 

 

 

 

Purchase of noncontrolling interests

(5)

(5)

Balance at June 28, 2024

316

$

139

 

(12)

$

(1,647)

$

$

14,253

$

(113)

$

12,632

$

$

12,632

4

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED) (Continued)

For the Quarter Ended June 30, 2023

Accumulated

Other

Total

Non-

Common Shares

Treasury Shares

Contributed

Accumulated

Comprehensive

Shareholders'

controlling

Total

   

Shares

   

Amount

   

Shares

   

Amount

   

Surplus

   

Earnings

   

Loss

   

Equity

   

Interests

   

Equity

   

(in millions)

Balance at March 31, 2023

 

322

$

142

 

(7)

$

(933)

$

$

11,824

$

(13)

$

11,020

$

$

11,020

Net income

 

 

 

 

 

528

 

 

528

 

 

528

Other comprehensive loss

 

 

 

 

 

 

 

(67)

 

(67)

 

 

(67)

Share-based compensation expense

 

 

 

 

 

32

 

 

 

32

 

 

32

Dividends

 

 

 

 

 

 

4

 

 

4

 

 

4

Exercise of share options

 

 

 

 

13

 

 

 

 

13

 

 

13

Restricted share award vestings and other activity

 

 

 

 

24

 

(32)

 

16

 

 

8

 

 

8

Repurchase of common shares

 

 

 

(1)

 

(189)

 

 

 

 

(189)

 

 

(189)

Balance at June 30, 2023

322

$

142

 

(8)

$

(1,085)

$

$

12,372

$

(80)

$

11,349

$

$

11,349

For the Nine Months Ended June 30, 2023

Accumulated

Other

Total

Non-

Common Shares

Treasury Shares

Contributed

Accumulated

Comprehensive

Shareholders'

controlling

Total

   

Shares

   

Amount

   

Shares

   

Amount

   

Surplus

   

Earnings

   

Loss

   

Equity

   

Interests

   

Equity

   

(in millions)

Balance at September 30, 2022

 

331

$

146

 

(13)

$

(1,681)

$

$

12,832

$

(495)

$

10,802

$

$

10,802

Net income

1,358

1,358

1,358

Other comprehensive income

 

 

 

 

 

 

 

415

 

415

 

 

415

Share-based compensation expense

 

 

 

 

 

95

 

 

 

95

 

 

95

Dividends

 

 

 

 

 

 

(740)

 

 

(740)

 

 

(740)

Exercise of share options

 

 

 

 

33

 

 

 

 

33

 

 

33

Restricted share award vestings and other activity

 

 

 

1

 

89

 

(95)

 

13

 

 

7

 

 

7

Repurchase of common shares

 

 

 

(5)

 

(621)