TE Connectivity Ltd. (TEL - Free Report) delivered fiscal third-quarter 2019 adjusted earnings of $1.50 per share, beating the Zacks Consensus Estimate by 8 cents. The figure increased 5.6% year over year and came well ahead of management’s guided range of $1.41-$1.45.
Net sales in the reported quarter were $3.39 billion, which missed the Zacks Consensus Estimate of $3.42 billion. It also fell short of management’s guided range of $3.4 billion to $3.5 billion. Further, the figure decreased 5.4% from the year-ago quarter.
This can be attributed to weakness in the key end-markets. Further, decline in orders and sluggishness across Transportation and Communication segments of the company impacted the top line. Moreover, slowdown in the auto-production in China and broad inventory destocking by distribution partners impacted the results.
The company’s total orders declined 10% on a year-over-year basis in the second quarter.
However, the company benefited from solid momentum in the Industrial segment throughout the reported quarter.
Coming to the price performance, TE Connectivity has returned 19.8% on a year-to-date basis, underperforming the industry’s rally of 25.5%.
Nevertheless, continued solid execution of the company’s strategic plans is likely to aid it in winning shareholders’ confidence.
Top-Line in Detail
TE Connectivity operates in three organized segments.
Transportation Solutions: The company generated $1.968 billion of sales (58.1% of net sales) in the reported quarter, down 6.8% on a year-over-year basis. This was owing to weakness in auto production worldwide. The company witnessed weak momentum across China, Europe and Americas. Further, the company’s commercial transportation exhibited sluggish performance. However, the sensor business performed well. Additionally, transportation segment’s decline was less than the magnitude of drop in the global auto production driven by to content growth in autonomous and electric vehicles.
Industrial Solutions: This segment yielded sales of $1,005 billion (29.6% of net sales), improving 1.7% from the prior-year quarter. The company’s growing traction in the aerospace, defense and medical fields drove the segment’s top line. Further, the aerospace, defense and marine business exhibited strong performance in the reported quarter. However, industrial equipment sales were sluggish.
Communications Solutions: This segment generated sales of $416 million (12.3% of net sales), decreasing 13.5% year over year. This was owing to broad-based weakness across all regions. Moreover, inventory destocking impacted this segment significantly since it is highly dependent on distribution channel.