Financial Performance - Fiscal 2024 net sales decreased by 1.2% to 15,845millioncomparedtofiscal2023,withTransportationSolutionsdown2.0105 million[188][203] - The company expects first quarter fiscal 2025 net sales to be approximately 3.9billion,upfrom3.8 billion in the first quarter of fiscal 2024[193] - The gross margin increased by 401millioninfiscal2024,resultinginagrossmarginpercentageof34.42,796 million, up from 2,304millioninfiscal2023,resultinginanoperatingmarginof17.6190 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 70million,or1.571 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 110millionto361 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 271million,asignificantimprovementfromanetlossof606 million in fiscal year 2023[256] Cash Flow and Capital Management - Net cash provided by operating activities was 3,477millioninfiscal2024[190]−Cashprovidedbyoperatingactivitiesincreasedby345 million to 3,477millioninfiscal2024,primarilyduetohigherpre−taxincome[237]−Capitalexpenditureswere680 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 4,203million,aslightdecreasefrom4,211 million in fiscal year end 2023[242] - Cash and cash equivalents at fiscal year end 2024 totaled approximately 4.7billion,withasignificantportionconsideredpermanentlyreinvested[236]−Thecompanyauthorizedanincreaseof1.5 billion in its share repurchase program, repurchasing approximately 14 million shares for 1,991millioninfiscal2024[251]−Thecompanysoldonebusinessfornetcashproceedsof59 million during fiscal 2024, recording a pre-tax gain on sale of 10million[196]ExpensesandCharges−Infiscal2024,selling,general,andadministrativeexpensesincreasedby62 million to 1,732million,representing10.9144 million in fiscal 2024, down from 260millioninfiscal2023,withexpectedannualizedcostsavingsofapproximately85 million[207] - Interest income rose by 27millionto87 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 8,285millioninfiscal2024from7,416 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 652millionandrelatedaccruedinterestandpenaltiesof80 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 339million)duringthefirstquarteroffiscal2024[194]−Duringfiscal2024,thecompanyacquiredonebusinessfor339 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 6millionduringthefourthquarteroffiscal2024[267]−Thecompanydoesnotexpectlegalproceedingstohaveamaterialadverseeffectonitsresultsofoperations,financialposition,orcashflows[266]PensionandObligations−Thecompanyexpectstocontributeapproximately70 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 68million[289]−A50−basis−pointchangeinexpectedlong−termreturnsonplanassetswouldhaveimpactedfiscal2024pensionexpenseby8 million[289] - Total contractual cash obligations for the company amounted to 6,489million,with2,075 million due in fiscal 2025[261] Market Conditions and Commodity Prices - Average copper prices decreased from 4.09perpoundinfiscal2023to3.91 per pound in fiscal 2024, while gold prices increased from 1,860to2,027 per troy ounce[204] - Commodity hedges related to expected purchases of gold, silver, copper, and palladium had a net gain position of 55millionatfiscalyearend2024,comparedtoanetlossof23 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 54million[307]−Theunrealizedvalueofcross−currencyswapcontractswouldhavechangedby538 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 186millionattheendoffiscalyear2024,including22 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]
TE Connectivity(TEL)2024-11-12 17:05