TE Connectivity

Second Quarter

2024 Earnings

April 24, 2024

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Forward-Looking Statements

and Non-GAAP Financial Measures

Forward-Looking Statements

This presentation contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward- looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward- looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this presentation include statements addressing our future financial condition and operating results. In addition, our proposed change of incorporation from Switzerland to Ireland is subject to risks, such as the risk that the change of place of incorporation might not be completed or, if completed, that the anticipated advantages might not materialize, as well as the risks that the price of our stock could decline and our position on stock exchanges and indices could change, and Irish corporate governance and regulatory schemes could prove different or more challenging than currently expected. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, the extent, severity and duration of business interruptions, such as the coronavirus disease 2019

("COVID-19") negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate, including continuing military conflict in certain parts of the world; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. More detailed information about these and other factors is set forth in TE Connectivity Ltd.'s Annual Report on Form 10-K for the fiscal year ended Sept. 29, 2023 as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.

Non-GAAP Financial Measures

Where we have used non-GAAP financial measures, reconciliations to the most comparable GAAP measure are provided, along with a disclosure on the usefulness of the non-GAAP financial measure, in this presentation.

2

Earnings Highlights

13% Adjusted EPS growth Y/Y in Q2 driven by Adjusted Operating Margin expansion of 250bps

  • Q2 Sales in line with guidance at $3.97B, up 3% organically on a sequential basis
    • Sales down 5% reported and 3% organically Y/Y as expected with each segment in line with our expectations
  • Orders of $4.0B, up 6% sequentially with growth in all segments
  • Adjusted Operating Margins of 18.5%, up 250bps Y/Y, driven by strong operational performance
  • Adjusted EPS above guidance at $1.86, up 13% Y/Y
  • Record Free Cash Flow generation of $1.1B in 1H FY24, up 32% Y/Y
  • Issued Connecting Our World report highlighting a 72% reduction in Scope 1 & 2 GHG emissions over the past three years
    • Set Scope 3 reduction targets validated by the Science Based Targets initiative

Q3 Guidance

  • Expect Sales of ~$4.0B with Y/Y organic growth driven by the Transportation and Communications segments
  • Expect Adjusted EPS of ~$1.85, up 5% Y/Y
    • Guidance includes a $0.15 Y/Y headwind from tax and currency exchange rates

3

Organic Net Sales Growth (Decline), Adjusted Operating Margin, Adjusted EPS, and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations

Segment Orders Summary

($ in millions)

Reported

FY23

FY24

FY24

Q2 Growth

Q2

Q1

Q2

Y/Y

Q/Q

Transportation

2,412

2,247

2,288

(5)%

2%

Industrial

1,193

1,122

1,197

0%

7%

Communications

388

404

526

36%

30%

Total TE

3,993

3,773

4,011

0%

6%

Book to Bill

0.96

0.98

1.01

  • Transportation orders reflecting ongoing stable global Auto production with incremental weakness in Commercial Transportation markets
  • Industrial segment showing continued strong order momentum offsetting destocking in Industrial Equipment markets
  • Communications orders reflecting design win momentum in Cloud & Artificial Intelligence programs

Sequential orders growth in all

segments

4

  • Automotive
    Organic growth in China offset by declines in North America & Europe. Our performance continues to be driven by our leading global position in EV/HEV along with electronification trends
  • Commercial Transportation Organic declines in North America and Europe, partially offset by growth in China
  • Sensors
    Organic decline driven by weakness in industrial applications and product exits

Transportation Solutions

$ in Millions

Q2 SALES

Reported

Down 4%

$2,483$2,384

Organic

Down 1%

Q2 2023

Q2 2024

Q2 ADJUSTED OPERATING MARGIN

Margin expansion driven

by strong execution on

16.6%

20.4%

operational levers

Q2 2023

Q2 2024

Adjusted EBITDA Margin

21.7%

25.1%

Q2 BUSINESS PERFORMANCE

Y/Y Growth

Reported

Organic

Rates

Automotive

$1,749

(3)%

1%

Commercial

384

(5)%

(4)%

Transportation

Sensors

251

(11)%

(10)%

Transportation

$2,384

(4)%

(1)%

Solutions

Expect to maintain ~20% target margins going forward

5

Organic Net Sales Growth (Decline), Adjusted Operating Margin, and Adjusted EBITDA Margin are non-GAAP financial measures; see Appendix for descriptions and reconciliations.

  • Industrial Equipment Decline driven by continued impact of destocking in our customers' supply chain
  • AD&M
    Organic growth reflects ongoing market improvement in Commercial Aerospace and Defense
  • Energy
    Organic growth in the Americas offset by weakness in Europe; continue to see strong momentum in renewable applications
  • Medical
    Organic growth driven by increases in interventional procedures

Industrial Solutions

$ in Millions

Q2 SALES

Reported

Down 4%

$1,191

$1,143

Organic

Down 6%

Q2 2023

Q2 2024

Q2 ADJUSTED OPERATING MARGIN

Margins as expected

at current volume

14.6%

15.1%

levels and business mix

Q2 2023

Q2 2024

Adjusted EBITDA Margin

19.2%

20.1%

Q2 BUSINESS PERFORMANCE

Y/Y Growth

Reported

Organic

Rates

Industrial

$356

(23)%

(28)%

Equipment

Aerospace,

Defense and

342

15%

17%

Marine

Energy

234

0%

1%

Medical

211

6%

6%

Industrial

$1,143

(4)%

(6)%

Solutions

Continued momentum in AD&M,

Energy, and Medical

6

Organic Net Sales Growth (Decline), Adjusted Operating Margin, and Adjusted EBITDA Margin are non-GAAP financial measures; see Appendix for descriptions and reconciliations.

  • Data & Devices
    Q2 decline driven by destocking in our customers' supply chain; continue to see strong momentum in Cloud and AI applications
  • Appliances Impacted by market weakness in all regions
  • Expect segment to return to Y/Y growth in Q3; seeing indicators of supply chain normalization in both businesses

Communications Solutions

$ in Millions

Q2 SALES

Reported

Down 10%

$486

Organic

$440

Down 8%

Q2 2023

Q2 2024

Q2 ADJUSTED OPERATING MARGIN

Margin expansion driven

by strong operational

16.3%

17.3%

performance

Q2 2023

Q2 2024

Adjusted EBITDA Margin

21.0%

22.3%

Q2 BUSINESS PERFORMANCE

Y/Y Growth Rates

Reported

Organic

Data & Devices

$273

(5)%

(4)%

Appliances

167

(16)%

(14)%

Communications

$440

(10)%

(8)%

Solutions

AI programs expected to drive future revenue growth; expect to maintain high teens segment margins in 2H FY24

7

Organic Net Sales Growth (Decline), Adjusted Operating Margin, and Adjusted EBITDA Margin are non-GAAP financial measures; see Appendix for descriptions and reconciliations.

Q2 Financial Summary

8

($ in Millions, except per share amounts)

Q2 FY23

Q2 FY24

Net Sales

$

4,160

$

3,967

Operating Income

$

537

$

692

Operating Margin

12.9%

17.4%

Acquisition-Related Charges

8

3

Restructuring & Other Charges, Net

119

40

Adjusted Operating Income

$

664

$

735

Adjusted Operating Margin

16.0%

18.5%

Earnings Per Share*

$

1.34

$

1.75

Acquisition-Related Charges

0.02

0.01

Restructuring & Other Charges, Net

0.29

0.11

Adjusted EPS

$

1.65

$

1.86

Adjusted Effective Tax Rate

19.5%

21.0%

*Represents Diluted Earnings Per Share from Continuing Operations

Adjusted Operating Income, Adjusted Operating Margin, Adjusted Earnings Per Share, and Adjusted Effective Tax Rate are non-GAAP financial measures; see Appendix for descriptions and reconciliations.

Q2 Financial Performance

SALES

$ in Billions

Sales down

ADJUSTED OPERATING MARGIN

250bps of

$4.2$4.0

5% Y/Y

16.0%

18.5%

margin

expansion

Q2 2023

Q2 2024

ADJUSTED EPS

Q2 2023

Q2 2024

FREE CASH FLOW

$1.65$1.86

Up 13% Y/Y

driven by

margin

expansion

$ in Millions

$845

$1,113

Up 32%

Y/Y

Q2 2023

Q2 2024

YTD 2023

YTD 2024

Strong Margin and EPS expansion with record 1H Free Cash Flow performance

9

Adjusted Operating Margin, Adjusted Earnings Per Share, and Free Cash Flow are non-GAAP financial measures; see Appendix for descriptions and reconciliations.

Additional Information

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Disclaimer

TE Connectivity Ltd. published this content on 24 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 April 2024 10:03:26 UTC.