Back to top

Image: Bigstock

TE Connectivity's (TEL) Q1 Earnings Beat, Sales Rise Y/Y

Read MoreHide Full Article

TE Connectivity Ltd. (TEL - Free Report) reported first-quarter fiscal 2023 adjusted earnings of $1.53 per share, which surpassed the Zacks Consensus Estimate by 2%.

However, the figure decreased 13.1% from the year-ago fiscal quarter’s reading.

Net sales in the reported quarter were $3.84 billion, beating the consensus mark of $3.75 billion. The figure rose 1% on a reported basis and 8% organically from the respective year-ago fiscal quarter’s readings.

Well-performing transportation solutions drove the top line growth during the reported quarter.

TE Connectivity Ltd. Price, Consensus and EPS Surprise


TE Connectivity Ltd. Price, Consensus and EPS Surprise

TE Connectivity Ltd. price-consensus-eps-surprise-chart | TE Connectivity Ltd. Quote


Top-Line Details

Transportation Solutions: The segment generated $2.26 billion, which accounted for 58.8% of net sales. The figure grew 5% year over year. The company witnessed 9% growth in automotive sales, which was driven by the growing proliferation of electric vehicles and strong content trends in electronification.

However, sensor sales fell 4% from the year-ago quarter. Also, commercial transportation sales declined 5% year over year due to weak momentum in China.

Industrial Solutions: The segment generated $1.06 billion, which accounted for 27.6% of net sales. The figure rose 1% year over year. This was driven by improvements in commercial aerospace, which led to 9% growth in aerospace, defense and marine sales. Solid momentum across renewable applications also remained positive for the company’s energy business, which grew 1% year over year. Further, growing momentum across interventional procedures led to a 4% rise in medical sales.

However, industrial equipment sales, which declined 5%, were concerning.

Communications Solutions: The segment generated $522 million, which accounted for 13.6% of net sales. Further, the figure declined 14% year over year. This was attributed to broad market weakness. Data and device sales decreased 8% and appliance sales fell 23% year over year.

Operating Details

Per management, the gross profit was $1.2 billion, which was down 3.5% year over year. As a percentage of revenues, the figure contracted 130 basis points (bps) from the year-ago quarter to 30.9%.

We note that selling, general and administrative expenses were $392 million, which rose 8% year over year. Research and development expenses were $173 million, which declined 1.1% year over year.

The company’s adjusted operating margin was 16.2% in the reported quarter, which contracted 240 bps year over year.

Balance Sheet & Cash Flow

As of Dec 30, 2022, cash and cash equivalents were $793 million, down from $1.09 billion as of Sep 30, 2022.

Long-term debt was $3.4 billion in the fiscal first quarter, up from $3.3 billion in the prior fiscal quarter.

TE Connectivity generated $581 million in cash from operations in the reported quarter, down from $944 million in the previous quarter. Further, it generated a free cash flow of $399 million.

TEL returned $410 million to its shareholders.


For second-quarter fiscal 2023, TE Connectivity expects net sales of $3.9 billion, with 3% decline on a reported basis and 2% growth on an organic basis from the year-ago fiscal quarter’s reading. The Zacks Consensus Estimate for the same is pegged at $3.92 billion.

Adjusted earnings are projected at $1.57 per share. The consensus mark is pegged at $1.60 per share.

Zacks Rank & Stocks to Consider

Currently, TE Connectivity carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer & Technology sector are Agilent Technologies (A - Free Report) , Arista Networks (ANET - Free Report) and Asure Software (ASUR - Free Report) . While Agilent Technologies sports a Zacks Rank #1 (Strong Buy), Arista Networks and Asure Software carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent has gained 10.5% in the past year. A’s long-term earnings growth rate is currently projected at 10%.

Arista Networks has lost 5.7% in the past year. The long-term earnings growth rate for ANET is currently projected at 17.5%.

Asure Software has gained 35.8% in the past year. The long-term earnings growth rate for ASUR is currently projected at 23%.

Published in