TE Connectivity(US:TEL)2024-11-12 17:05Financial Performance - Fiscal 2024 net sales decreased by 1.2% to $15,845 million compared to fiscal 2023, with Transportation Solutions down 2.0% and Industrial Solutions down 1.5%[188][198] - Organic net sales were flat in fiscal 2024, with pricing actions positively affecting organic net sales by $105 million[188][203] - The company expects first quarter fiscal 2025 net sales to be approximately $3.9 billion, up from $3.8 billion in the first quarter of fiscal 2024[193] - The gross margin increased by $401 million in fiscal 2024, resulting in a gross margin percentage of 34.4% compared to 31.5% in fiscal 2023[203] - Operating income for fiscal 2024 was $2,796 million, up from $2,304 million in fiscal 2023, resulting in an operating margin of 17.6%, compared to 14.4% in the previous year[210] - The Transportation Solutions segment's net sales decreased by $190 million, or 2.0%, in fiscal 2024, primarily due to a divestiture impact of 1.7% and foreign currency translation of 0.6%[218] - The Industrial Solutions segment's net sales decreased by $70 million, or 1.5%, in fiscal 2024, with organic net sales declining by 3.3%[225] - Communications Solutions segment net sales increased by $71 million, or 3.7%, in fiscal 2024 compared to fiscal 2023, driven primarily by organic net sales growth of 4.8%[230] - Operating income for the Communications Solutions segment rose by $110 million to $361 million in fiscal 2024, with an operating margin of 18.4% compared to 13.2% in fiscal 2023[231] - Organic net sales in the Data and devices category increased by 10.2% in fiscal 2024, attributed to growth in AI applications[230] - Organic net sales in the Appliances category decreased by 3.7% in fiscal 2024 due to reduced demand from inventory corrections and strategic exits from certain product lines[231] - For fiscal year 2024, the net loss was $271 million, a significant improvement from a net loss of $606 million in fiscal year 2023[256] Cash Flow and Capital Management - Net cash provided by operating activities was $3,477 million in fiscal 2024[190] - Cash provided by operating activities increased by $345 million to $3,477 million in fiscal 2024, primarily due to higher pre-tax income[237] - Capital expenditures were $680 million in fiscal 2024, with expectations for fiscal 2025 capital spending to be approximately 5% of net sales[239] - Total debt at fiscal year end 2024 was $4,203 million, a slight decrease from $4,211 million in fiscal year end 2023[242] - Cash and cash equivalents at fiscal year end 2024 totaled approximately $4.7 billion, with a significant portion considered permanently reinvested[236] - The company authorized an increase of $1.5 billion in its share repurchase program, repurchasing approximately 14 million shares for $1,991 million in fiscal 2024[251] - The company sold one business for net cash proceeds of $59 million during fiscal 2024, recording a pre-tax gain on sale of $10 million[196] Expenses and Charges - In fiscal 2024, selling, general, and administrative expenses increased by $62 million to $1,732 million, representing 10.9% of net sales compared to 10.4% in fiscal 2023[205] - Net restructuring charges were $144 million in fiscal 2024, down from $260 million in fiscal 2023, with expected annualized cost savings of approximately $85 million[207] - Interest income rose by $27 million to $87 million in fiscal 2024, attributed to higher interest rates and increased average cash balances[212] Tax and Deferred Assets - The effective tax rate for fiscal 2024 was (14.2)%, compared to 16.0% in fiscal 2023, reflecting a significant change in income tax expense[212] - The valuation allowance for deferred tax assets increased to $8,285 million in fiscal 2024 from $7,416 million in fiscal 2023[215] - The company has significant valuation allowances for deferred tax assets, which may impact future income tax expenses[283] - The company recorded unrecognized income tax benefits of $652 million and related accrued interest and penalties of $80 million, with uncertain timing for realization[263] Business Acquisitions and Divestitures - The company acquired approximately 98.7% of Schaffner Holding AG for CHF 294 million (approximately $339 million) during the first quarter of fiscal 2024[194] - During fiscal 2024, the company acquired one business for $339 million, net of cash acquired[240] Risk Management and Compliance - The company utilizes established risk management policies to manage market risks associated with interest rate and foreign currency movements[301] - The company does not execute transactions for trading or speculative purposes, limiting exposure to major financial institutions[302] - The company settled trade compliance matters with a penalty payment of approximately $6 million during the fourth quarter of fiscal 2024[267] - The company does not expect legal proceedings to have a material adverse effect on its results of operations, financial position, or cash flows[266] Pension and Obligations - The company expects to contribute approximately $70 million to pension plans in fiscal 2025[264] - At fiscal year end 2024, a 25-basis-point decrease in discount rates would have increased the present value of pension obligations by $68 million[289] - A 50-basis-point change in expected long-term returns on plan assets would have impacted fiscal 2024 pension expense by $8 million[289] - Total contractual cash obligations for the company amounted to $6,489 million, with $2,075 million due in fiscal 2025[261] Market Conditions and Commodity Prices - Average copper prices decreased from $4.09 per pound in fiscal 2023 to $3.91 per pound in fiscal 2024, while gold prices increased from $1,860 to $2,027 per troy ounce[204] - Commodity hedges related to expected purchases of gold, silver, copper, and palladium had a net gain position of $55 million at fiscal year end 2024, compared to a net loss of $23 million at fiscal year end 2023[307] - A 10% change in commodity prices from fiscal year end 2024 prices would have altered the unrealized value of forward contracts by $54 million[307] - The unrealized value of cross-currency swap contracts would have changed by $538 million with a 10% currency fluctuation from fiscal year end 2024 market rates[304] Goodwill and Impairment - The company completed its annual goodwill impairment test in the fourth quarter of fiscal 2024 and determined that no impairment existed[280] Other Financial Metrics - The company had outstanding letters of credit and guarantees totaling $186 million at the end of fiscal year 2024, including $22 million related to the divestiture of the Subsea Communications business[259] - The company had $131 million in redeemable noncontrolling interests associated with its First Sensor AG subsidiary[265] - There were no floating debt outstanding at fiscal year end 2024 or 2023, indicating effective interest rate management[305]