TE Connectivity 10-Q 2024-06-28

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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)

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.

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.

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 s

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Item 5. OTHER INFORMATION

Rule 10b5-1 Trading Arrangements

In the quarter ended June 28, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement for the purchase or sale of our securities, within the meaning of Item 408 of Regulation S-K.

ITEM 6. EXHIBITS


Exhibit Number		Exhibit
10.1		Second Amended and Restated Five-Year Senior Credit Agreement, dated as of April 24, 2024, by and among Tyco Electronics Group S.A., as borrower, TE Connectivity Ltd., as parent guarantor, the lenders party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 of TE Connectivity’s Current Report on Form 8-K, filed with the SEC on April 25, 2024)
22.1	*	Guaranteed Securities
31.1	*	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	*	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	**	Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document(1)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File(2)

*Filed herewith

**	Furnished herewith

(1)	The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

(2)	Formatted in Inline XBRL and contained in exhibit 101

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	TE CONNECTIVITY LTD.

	By:	/s/ Heath A. Mitts Heath A. Mitts Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date: July 29, 2024