TE Connectivity (TEL) 21 Apr 212021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the TE Connectivity Second Quarter Earnings Call for Fiscal Year 2021. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to your host, Vice President of Investor Relations, Sujal Shah. ahead. go Please

Officer, thank discuss and today joining conference Chief our Chief Good Connectivity's you second to Financial and Curtin; TE Officer, me Mitts. quarter call Executive morning Terrence for Heath results. are With

certain During we information forward-looking statements ask be press today's the and included review forward-looking in this to release. will call, cautionary we providing you

accompanying review and In slide The release and we morning our discussion addition, this press portion Investor the can we're the address questions time. we will asking of te.com. Relations that along the can press our you presentation to during our use of the the to everyone use certain Due and to items. be on of non-GAAP limit presentation allotted large slide website the question we related measures participants to of in to sure these themselves with to sections ask make of tables at opportunity ask the Q&A today's found number one give call, portion the an everyone on release

rejoin to willing you ask that have queue question. if questions you but are take a follow-up second We the

Now let for comments. Terrence over me call turn to opening the

everyone results Thank the as thank us and you cover of our our quarter joining third you as to our for Sujal today quarter second for the for well expectations fiscal XXXX.

our businesses. of will in some the our second strength and growth on see perspective quarter content the our we get I you to diverse think let the portfolio across into as I give Before our of are benefit demonstrate you me slides and continuing results

chains performance is flow I are the markets world recovery. trying keep backdrop with broader We an in of improving is macro global would as say to are and delivering strong our ahead supply performance with operational generation. dealing growth a that economic that with up this well cash free organic as

about well results, our this today. We and model, bit as quarter we provide you are it see talk quarter to execute to that second can the for more third as a continuing in guidance I'll little the our business and

messages So key some let me also today's provide call. about

execution record of First very delivered generated represents earnings off, I the per quarterly and sales with year-over-year. second $X.XX We adjusted of growth growth in and this XX% share pleased quarter. XX% a of EPS am our

production Our this strong continue commercial we moment our capitalize sales levels were in adjusted in semi COVID and the business a Kurtenbach our when by we shortages. similar to it secular quarter. days is production by autos markets electronification and to of still most will strategically manufacturing our want million industrial increased each well-documented increased performance are continued continue In our end for in the believe equipment remains to globally, demonstrate year-over-year impacted of look expanded our our last appliance margins segment, from the which our is driven XX as the of we In earnings expenditure you're do demand. and automation we our cash similar with capital we've the expansion share was flow, ahead of in orders are markets In ago this backdrop $X to basis being the and recovery operating transportation with on. in bit third were trend expecting electric as I But seen into we adjusted our Also XX to the to vehicles, And medical billion, due we in our to and of our the Also, in continue range The segment, demand just what communication record around segment, With also of quarter approximately to the XX continuing. an and generation that continue fiscal commercial continue take auto units transportation a mentioned the that vehicles XX% trend these our both quarter, to production is auto environment recovery free and as second truly cash to Consumer [ph] strong consumer serve see our to per in remaining And year. to is businesses businesses. just and broad what strong evidence even margin is a us was in million seen to to trends. benefit of indicators first getting we trends last us quarter. the expectations company half increasing delivered and a do stable content industrial frame market that little also we see relative we per the last strong and which I we've stronger, of we leadership globally communications quarter spoke. to and sales was at that where increase end industrial growth and out segments. which of of also TE of our outperform to demand momentum segment positions segment, are points and we've stability transportation benefits positioned broad further we across continues factory aerospace our going XX year-to-date in driven going both enable forward. in by to higher remain strength mentioned markets. see

strong ongoing the expected continue markets in in some think chain I covered around And center. as segments look supply. industries see the and secure to replenish about recovery serve challenges I we their a faster than these has backdrop, trends mentioned resulted as as that demand We just the further the data of in applications, acceleration when capital well cloud as you the our in expenditure trends to supply

And called pressure and supply his chain last still want for remember it we're our quarter a COVID. color the session. While has orders, on experiencing and third this remain highlight expectations this Heath for pressure our in are factored I benefited into will still dynamic let's the provide we guidance world broader is that that's is more which in strong, has thing on the to

continue some remains. pace certainly varies to parts and out see world, and certain countries getting and We availability customers rolled of go again vaccines is impacting of the into some And the lockdown are the uncertainty deployment country so greatly in supply of the of by our chains. vaccines this their while

will helping our improving safe also customers conditions. be has focus to been on the continue capitalize employees Our and keeping economic on our while

provide additional that backdrop, So and appreciate details quarter you into get our expectations second I'd with Slide the let for some maybe as if to a for third me and the turn our X to quarter. could slides

were than basis billion segments. organically expectations better of They a Second quarter reported $X.X each sales in XX% and XX% our of our up on were year-over-year.

We have double-digit with businesses. XX% our organic across segment growth in transportation growth all

strong in the I and due were We From replenishment our XX% organic double-digit to growth market. XX%, billion aerospace in performance improvement the growth weakness the segment And with supply along this businesses It segment, down second of in of chain $X.X industrial that our was reflects also which segment. in customers. orders X% in mentioned, sales markets the in year-over-year. orders communications our organically had the very with both an in quarter up ongoing was inventory were by that commercial both perspective, the strong

shareholders. XX driven by Our we this up and points am basis able cash had earnings flow entirely quarter expansion. the XX% per companies are and free perspective, operating year-over-year all a at flow $XXX up million returned free was being that share with water were our which to in pressures a was approximately resulting in a adjusted performance, supply $X.XX the manage with record was in I the From cash pleased was being dealing and year-over-year. $XXX million, quarter, margin margins chain second operating to

into forward, we adjusted performance share expect continue with on strong similar levels. third sales second As to quarter, per our earnings we being the quarter look to our

we to with which sales line $X.X in levels and just just the the the and to saw we approximately quarter be be on basis in reported this share and billion, a adjusted per $X.XX, For closed. is we both an we expect organic significantly up quarter third is year-over-year a expect earnings

we're turn to let's So cover that the seeing. X Slide trends order and I will

highlight XX% of passive communications. certain that already those were in fiscal nice we a the times. than stated in approximately what both that what and despite at areas supply orders the and orders segments, chain seeing customers I where In quarter, that's of seeing the book-to-bill this some In industrial are semiconductors components, to different transportation placing But production the supply market segment, some during segment, of in the of needs, only and offset segments. orders recovery supply and the market, to equipment that current reflects replenishment I driven X%, were and the mentioned. continued would As in orders weakness in not by commercial year-over-year sales we XXXX. that recovery increase picture transportation I had also our in lead are respectively, is our customers is very partially secure aerospace we're and strong beyond were placing we a XX% our industrial depleted decline billion up have by these but replenishing also meet Orders and in communications both the seen chains it in shortages are we with and growth had X.XX. $X.X is in

seeing were And segments. were that order Let a all from do XX% a were Europe and to two fiscal going our me show industrial in orders orders growth we're geographic basis driven up and segments also really regions. is. America strong XX%, up up China and In broad that based momentum organically this one. across was basis. on to a orders, sequential I'm where color growth communications by Orders X% those what our sequential a sequential was our basis North on some add And from in on base to quarter on

year-over-year production XX% get content our up our they're going sales X% X In briefly Heath. segment results, X% in businesses. our segment upon turn into of over the in over range. to and I'm are Transportation Slides expected each organically organically were to we and touch year-to-date XX% me before let generating outperformance through X. to were on with So each up growth I auto year-over-year sales

of We by driven probably continue by and global In our electric of number ongoing we position increasing transportation, growth similar gains. to first production as you've customers share world. are launches ongoing our saw leading emission and the around outperformance, and EV quarter, trends, our vehicles commercial from a to organic increased benefit XX% seen, content

the all and along our country. X operator standards double-digit are emission our commercial in strong China, in regions adoption position of X increased this in which Euro all business. market with We growth growth business, benefit in saw transportation reinforces that to continuing serve verticals we in from stricter and in that We

The which XX.X%, XX saw despite We XX% and applications. other increased and content expect platforms this versus organic growth this continue margins nice basis thing train margin platforms with In segment, a the growth growth power expanded is in volume. by electric and win to in pressures. year sensing these in excuse and the design me, increase confidence we to that us do see out markets all our our potential about chain prior auto operating as continue in the points in for wins to higher adjusted sensors future continue auto volumes see From supply perspective, years. expand driven pipeline market to we we on in double-digit trucks give business growth

now X% the if earlier, So did I we organically turn year-over-year. as sales segment, decline said industrial to our

aerospace, During by market be XX% the the continued business declining this in aerospace the our segment marine defense, and commercial to organically year-over-year. quarter, decline impacted with

business our When I equipment regions all believe areas in semiconductor expenditures automation increasing we're along very about patterns, accelerating industrial in strong already, auto strength covered capital applications is at in levels. chain. you supply order XX% was factory the signs do benefiting the manufacturing order As it and from and market, upon as well showing stabilization we up based the growth organically think with current where this as equipment of like

especially these to procedures year-over-year. medical segment, and our being weakness caused driven procedures was see increase industrial and organic XX% our industrial the growth the and elective by driven solar to customers this experiencing in medical the XX.X% what X% the continue organically in expect of as we're significant it saw to declined is renewables, driven And in world. ongoing COVID commercial growth business market and year. to in in down We industrial margins margin from dynamics our later energy was lastly, by penetration start And are and this drop increase really a From this by delays our return we are in perspective in with seeing. around volumes. consistent that we by segment, was business year-over-year And the aerospace applications interventional benefiting our in to solutions,

grew me growth speed So very position appliances. In secular expenditures by and to our with the related in gains we cloud enabling benefit at and the both strong Sales content cloud segment cover to and in from the our to and data us and delivering strong share market year-over-year and services let solutions high customers, segment in to organically the capital share XX% trends for are organically cloud performance. year-over-year, market this in operational rate. devices we leading sales have sales continue grew communications Favorable built on applications. devices grow both this and increased due segment are data XX% strong gains double recovery in our while

and you segment are generation. generation on give server our the example, all content to next Sales by quarter in the and on has the share the team operating with through margins versus prior versus global perspective, also improvement of execution year-over-year, In delivered trends adjusted chain one margin seeing in providing up see the business supply the major results. margin leading and we their providers, strong these this XX our regions. just these prior I in grew at am communication position, strong and our very delivered growth an markets way From we Now, strong operating communications applications organically execution appliances trends. teams and you points deliver our are capitalizing cloud ongoing while growth this the were our strong now market the XX% XX% pleased across delivering reflected pressures gains, XXX in end and to year. market driven environment, expansion worked are the operational our basis team

let me more over and that, forward. it to into with to So turn our financials on Heath details the get expectations going

XX% million X, will details income GAAP where morning million good QX provide Please million included turn Well approximately financials. related operating thank margin XX%. restructuring acquisition the was XXX year-over-year you, other and everyone. charges. adjusted million to of Terrence and operating Slide was charges with more and I XX on XXX of of an Adjusted up operating income and X

of was and EPS $X.XX The a other XX%. in quarter and was and QX for $X.XX. restructuring EPS and was We cost acquisition, charges of and effective change optimize organization $X.XX the of our in charges for GAAP a adjusted tax rate continue the to Adjusted footprint restructuring, XXXX. total can million improve XXX the the structure approximately to fiscal expect included ballpark manufacturing

up to sequentially expect XXXX. tax and for to quarter rate the expect rate fiscal our For XX% slightly tax effective be an third continue adjusted around we

ETR Importantly, our we well cash full expect the tax stay our below for to rate year. reported

was X% XX% operating up reflecting Adjusted points turning expanded sales XXX up of XX% X.X XX% $X.XX strong Adjusted the sequentially Currency and operational Slide by prior Now million strength demonstrating versus performance. our year. impacted of year X, positively of rates the prior sequentially versus were to sales the were basis year. exchange prior and EPS our year-over-year the versus X% XX portfolio. and billion margins

saw in growth, quarter are other the freight supply you on as suppliers broader our on quarter. impacts While continue of will a And are and through these third of charges higher into the issues pressures having and expected customers level this have we chain supply would these well. we aware, and higher as sales fall impact chain

the XXX our given with in As chain free from and that are our flow the cash increased the delivered performance the and approximately of shareholders expect first the record half the model and repurchases in and $X expect was is shown share going strong. for acquisitions. quarter approximately In up we seeing Terrence free we results XXX% as returned activities flow in fiscal the be and these markets expect dynamics, cash remain pleased Free and a forward free of level cash over thirds -- year. very many free time the of the supply catching quarter dividends of in the shareholders cash year. We one mentioned, of we demand use flow guidance. to cash we to I'm for is quarter quarter quarter and two XXX committed and for of approximate to used We to momentum cash a returned our which to XXX flow million of third billion, third had strength cash operating cash disciplined our full million for be flow to strong, to year-to-date continue through was demonstrates conversion million. to to the a are end our We we generation our

we days equipment, in ago, growth and acceleration serve Before the organic portfolio us. margin in excited growth seeing To have I serve with along is industrial to go remain leadership many along the that markets. are outlook communications summarize, what commercial about of we and ahead we expansion some for of with to we consistent the the we questions, markets of positioned markets reiterate positions opportunities our we with with transportation, want how XX

seeing than nothing faster the as respect has continuing supply across are growth are impacts economic will term these changed benefits expectations. on are and of recovery our capitalizing with the corresponding These and resolved result. to our near be broader to pressures margin The expected, see chain in a and portfolio been and trends a secular We we has opportunities. expansion

on continues for executing can of the things are reflect We to strength we our well and outlook portfolio. our control QX

We on expect business value creation to maintain a our performance. cash disciplined focused strategy, for drive flow, remained And continue model going to and balanced generate and our strong through capital free stakeholders forward. we've

it questions. Now let's up open for

you Okay, session? for could the thank Q&A please the you give Michelle, Heath. instructions

will And your Hettenbach Craig first question Instructions]. Morgan from [Operator from Stanley. come

is Your open. line

were Thank replenishment call. to the for a there Terrence, on number you. of Question references

get of customers when the So are can you and the seeing? importantly you're through sell seeing talk type inventory about will you the strength just up business, think you on in caught

and the see orders the see make, ensure -- also to get do see, Craig that the things supply that think you products get people all make me they expected. not I across a that are thanks we're what orders are some let that the see hear of Sure, trying want chains dealing only faster our one aren't to about low. rate than we we -- components. up in other inventory to a that in recovery When improved the those of we stresses with we And for in that all and there recovery that is but at markets seeing levels we

I need So that that than channel look to that, you at motion. our is because the you stresses to have think are normal, partners for recovery you they're quarters when play and when of catch you trying that's low. all up. of our holding were in lower channel These couple pretty turn that And when I middle do taken are that are partners, think about and out very think a based we we're even broad stocks it levels a time. real get in

probably in the is you it a truly markets broad replenished. see quarters of will couple it get to that very across take So everything those strength and

have thank you, please. question the next we Craig. Okay, Could

Yes.

Wamsi America. comes question from from next Your Bank of Mohan

open. Your line is

a thank within these much sustainable of few performance. this the how is Can Terrence, cloud Yes, alluded you. expecting you remind sustain margins? to things now are communications are segment you here you to how growth and that us and

I thanks us least things last of in think our that year. the to In it have front one impacted segment of Wamsi. was communications that Yeah, is keep we was

Puget you didn't the our the when makes, auto even have that or that look results, transportation think world I segment the they more segment so down because has production. at impressive when shut that dip had a And western

we growth. see It CAPEX is driven you both addition in the that off is I a growth position cloud the do and market it's momentum D&D. share from acceleration to share job first by and cloud continuing and in to so that build in a applications of to think And perspective primarily where from more perspective that really that's continue we team, ourselves a nice driving

segment world. position, as from thing and The you global great has our appliances business that other we're the client's globally that certainly in is have have also accelerated a around benefiting

businesses business and seeing benefit how globally are. two also you're that You're seeing the of

So and businesses it seeing these you're certainly orders, growth. I talked balanced the very in about but are globally

expect positioning feel that done the segment would the So would line. historically. at, than good top told the say this margin you also I we're about with volumes that would we've we've higher on what we be

was said types we probably levels. always middle at of So this teen these

time. And put team You'd portfolio we've we done the middle probably that well the teens the operational done. the have higher over just execution as improve be to as shows trends the that it has work it around here, in

for So question. thanks Wamsi the

question, we next you Could Wamsi. Thank have please. the

from next from Amit Evercore. Your Daryanani comes question

is line open. Your

book-to-bill for everyone. we're on put of I Thanks X.XX, in revenues. deviation so between be guide was the Terrence, number you applaud I my seeing the and June if the question. out wondering I the you book-to-bill quarter north the morning, about Yes, X maybe both in if mean, of that good more the June right, think order guide, I taking solve would strength quarter would would billion

guide? I And orders there? talking what delta the book-to-bill to any there deviation trends love would channel So related OEM is about, between your you're understand just versus the is that the between to versus

the were your acceleration I'm at just me of also When look first, you probably some million it, you're take total And hundred a the the build. similar seeing that's do piece if sales okay. channel with going to So and last than you the what stresses, what take to it, the chain higher let couple where company see trends channel orders our grew grew. in we of supply

know, partners trying, supply we're direct. recovery inventories chain catch this different is levels so book-to-bill we as getting seeing pain how the support all So is It seeing production, make a trying and our get faster a that's depleted, what do into are look their were it's to backlog and see have to not the up. for there's But because customers place. X.XX, I wouldn't than do there of also they're about in to business low, the not what you but you things only trying you say you this we're at points typically business that are When sure out sitting replenish world. channel orders

there's on There's on. input some the product pressures that points and have Heath on constraints pain talked our about certain sets we some side. some of of materials So, inflation

will normalize on but in check, lot supply It out that chains guidance than So guidance over you And, the we're have more time that deliver. see a chain and is now it XXXX. our to right replenishment a of is orders after to I higher going schedule things think what really COVID a took full-stop. are supply lot the a you our there'll and we be going have

we Okay, thank next please? you question, Amit. have Can the

Yes.

RBC from Capital comes question from Spak Joseph Your Markets. next

Your line open. is

low If look XXs, about that incrementals compare delta in $XX actual Thank of you very the that that million. at quarter sort much. is the we to and

headwinds? then of quarter? magnitude so sort your and I know about logistical from you could the the head So continue, fiscal margin on is mentioned And you of third we you experienced maybe takes as what puts into that could talk of that some order

I'll the Heath, this question. Joseph, Sure. is take

levels We You're talked with these we've would north as volume about. flow to right be of assumption. your have expected through on XX%

through And in, of that flow so of, type we basis puts you had terms a that came in the number into then and probably in it delta impact year-over-year of margins. terms the on on where to the

continue the we input some will year, on, along with into expect can free our we What materials work certain inflation issues some that that improve actions will as we those, are of underway pressure things that based As the our inflation, we way inflationary feel of we the to through some through levers margins the is quarter, team well modestly forward on work that deal third to some there's pass different otherwise. charges, way on out that. combat our those we or and and fourth of our to things expect on freight have I hammering as pressures the whether to pull continue the ability of timing the where would But and as here there. to that's

Okay. you, Thank Joe. question, please? have Could next the we

Yes.

Your Chris comes from from Snyder UBS. question next

Your line is open.

to on and Thank the coming you. EV My pipeline demand question is of market. wins

production will a XXX given new Just expect increased focus unit are these carry voltage, for and awards, should above is CPV share we the on high initial reached? until better you seeing scale relative to ICE

thanks. Yeah, no

remember a So our in a leading already. let's position we what very share couple do things that on is of heavy

vehicles with around have presence. back and went is regions emission it's there, about and, wouldn't see it across was both a we you be you would strong if we higher, say very see think where certainly closer Europe I I and you line say and What talked do share EV if momentum the and transportation. automotive our So ICE leading few in share is is years, with it just X it's going continuing strong these vehicles. been has take This year are And XX million electric we hybrid. there, to that you programs in Asia pure always to electric the million

nice our acceptance models those because to attractive those of coming out, And than see our models do the overall what's voltage, adoption, EV expect high in consumer line we is the about continue the think CPV. what you to train. much So new when content, more see are that We be with XX and the pulls on happens strong. growth with content it the

I they it along the in platform to electric So talked about content that fleet was the trends have heavy becoming And positioned TE more things on is are have an where those. seeing out truck it's script improving wins recovery, that we as be that's whether more driven, the going secular innovation the we XXXX, a driver probably vehicle and the XXXX, to of with also in going one my we launches model the of in and are is car.

So more the of in trends, economy for backdrop creates opportunity an improving those just us. secular growth

Okay. you, have next question, Can the please? Chris. Thank we

The J.P. Samik from from Chatterjee next question comes Morgan.

Your is open. line

ask taking an for my to automotive well. I wanted questions. you thank Great, as

to same we're manage just You had strong expect to in are are of start uncertainty wanted you and the impact automotive Terrence the from the shortages what there of with to kind results production moderate? are these the despite still model they want or of start how they on in they seeing your to -- chain, of terms in to terms automotive, ahead hearing some to supply ordering when sticking shortages,

than Well, think ramping, where of every things supply And about one trying were our I dealing OEMs that's work with. the consumer for chain great from when the with consumer up. we just while one even talked to here showing a is is think is happy through the months are we the number the I up. bigger six pressures, OEM, extent now, were at And showing and we're if we industry

are and it So, semiconductors what is the there documented. out news very was well nice certainly and big

two. less in units production impacted bit million a than little a Now that quarter

probably months similar And back in number to this but said million bit quicker range. unit little what's going auto in that's than will quarter be is three, we and six production, that year have ago. auto production think XX XXXX be to a million to XX global I would staying it's a levels, nice

are as that very right hard ramping We're to cars very knowing much make sure working we're all the OEMs trying OEMs the and the the much So out get we to back a up working high together going. to consumers. do all now, level, keep it's how to very

we're supply customers fiscal going to capitalize through of now discussions is we And to the right And lot together our to a to sure think year. very so there volatility I are have through OEM yeah, how around And due rest to the this work of make do opportunity. work much today continue to chain. that, the get on our

Can we question Thank the next Alright. you please? Samik. have

Yes.

comes Mark next Sachs. Goldman question from Your from Delaney

open. is line Your

Thank approximately the or Yes. flow income. for Good this reiterated flow to you that talk right forward, puts in some approximate of the anything could be expecting the level this be going cash for very unusual free forward? question. that recognize going type thanks year year any of cash but And free XXX% given you going Heath, conversion taking to on flow conversion benefiting takes Can cash there's about year you. be morning. there's is whether and conversion net free much and view not

Well for Mark, thanks the question.

to closer a as now. free helpful think capacity that X% pull there flow this way the three That that I of is there, tad we flow. to as number -- in how of years, a the things is we've are particularly of the percentage more from were that last and of couple seen get moderated number components one you we bit higher of things look years move at I cash we versus the And that year sales, leverage as CAPEX we've is the put have our I as few and worked place under that cash running converts we have one through certainly a in think that of forward, terms ago. benefiting maybe that X%, we

ability benefit pay our to our lower we The than other cash ETR. our the thing much below tax obviously well tax from that rate manage and our is we way structure being

few a this but and to maintain ability environment payable good. improving receivable days, this has of those there's our working for story has so been been volatile us capital year-upon-year a things, despite And days year good and of types

nothing unusual we for continue imagine. So starving to revenue we're in investments. outlook can the not cash numbers our priority flow gets or it a FYXX to and -- perspective. The monitor you continued first growth as organic businesses I from

up right we that position positioned forward forward or in an investment there's or now. good a So and I if we have highlight feel we terms have step will of we are now, that. how a about significant going year in that coming But, think a more good restructuring something, we

the Can please. Alright. Thank next question, have we Mark. you,

question comes Joe next Your from Giordano from Cowen.

line open. is Your

Hey good morning.

Joe. Hey

Difficulty]. [Technical

from last auto back XQ, look replenishment in chain think points some then. benefit in Just basis supply if year of I XX I the had you

basis you basis quarters? should I favorable this, like it from I quarter So about that like assume the is still few this a XXX in chain quarter, if that be your results number of next look was the this for and that supply production, like, should at points, kind and like grew pretty points above think XXX how I

of have difficult I because right. you're think secure people and did trying COVID, year in we to we at quarter, just saw this quarter, rolling in chain sort Joe very look we out it's one getting supply. into were last With content to supply benefit,

look it. over appropriate think need And, You term. at a I way look the to at longer it more that's to

the few on is be has products gets other car. of to the features data the that and mix said And this of and a electric be core mid-XXs that then effects around of sourcing should our half driven we just years that the of something certainly put what's that vehicle, the to to on supply that's chain electronification we continues when at vehicles And if this sort in As mid more we versus sort car at half Infrastructure is, ago, last our as year, view in quarter, look lower due year. is as it. autonomy. you we look positioning XXs, gets without

chain are I we think that same in told last So without quarter. we this year still you supply figure

move one supply quarter. to I are it get chains where into get difficult to it in, number you trying is think in when a into

question please? you next Okay, the thank Can we Joe. have

Next from comes from Research. Davis question Melius Scott

is open. Your line

good Hey, guys. morning,

Scott. Hey

do How of excess of contracts get are such? are I cost have help handled orders, and ordering kind these the you folks that can when price additional offset mean, handle, and or how you double some issues you want more, the no

ones we about metal. in our of larger about in of of out distribution did adjusters XX% we was we them and on you We for it pressures. rolling What think some Scott, so January, some have pricing have July our every Sure, months. six for in so do when increases writers business. We some the customers, metal with inflation do other price that have did

expansion as talked we about, the as go So quarter. margin expect modest we he third into do

Some through to of those is continue as to things manage it kick it. in, as try we

very customers. price have mechanisms the sorted with we So with it markets we plan. is there will increases how aligned But our the different by be

we Scott. next the you, Can please? thank Okay, question, have

from comes Christopher Glynn question next Oppenheimer. Your from

open. Your line is

seeing lot Thanks. learn you Good on shaping Higher industrial how that handful a are category. the macro more level with terms super personnel to robotics makings morning, and you're emerging cycle everybody. of in wondering over question during helping up. an of pretty cycle, COVID, disruptions automation of has I'm been and see do automation years? people the investment the of but comparisons if The you next

impacting have see auto if to manufacturing it What year I consistently cycle. that's that going And a down hit. and you semiconductor as What positive that wasn't production it elements you're went year, going were before we would globally, many around you accelerating. tell see last equipment There that pretty back, got certainly is space the were what we well.

of you side electric it. around of around seeing those the supply lot a Certainly no chain, and is battery either. auto surprise the the You're investments warehousing the see vehicle

investment. emerging, quarter, with here I do we really So think positive what this to saw saw I acceleration backdrop in, acceleration you're seen cycle do think quarter. fine And pretty just we an we going we're told the have you, automation last to that consistently, have hope around an a some we globally, is

that both think out face COVID. two so COVID. it, Where I by As cycle equipment play where in you an could medical, we do and people let's recovery haven't have continues, Comair were it, are coming capital economic stronger stronger industrial impacted the that's here see an markets of like and we in seen a medical which of

Chris. you, Can we next have thank Alright, please? the question,

next from from your Jeffries. question And Kelly David comes

open. Your line is

Terrence, the remind can distribution follow deeper don't your of A quick a you thanks. mind, good Heath, sense and Hi, you mix morning, up order our just us struggles channel trends exposure, hoping Sujal. us prior give within you and could there of And as question if maybe communications and distribution the well? on

Sure, the mix you distribution you our industrial company. well in do what our as is about take as it have our XX% of segment, But segment. total when higher is that mix, CS

just distribution, in XX% up those that. cases a there's lot automotive, time, don't Now, you're In you plus. in not of a have direct that's

sort growth book-to-bill industrial. company, revenue have But communications of our So total and see that our you And, in line we do was in was total with company higher area the growth, mid-teens. revenue to meant their more XXX in not weightings did as like book-to-bill. it more inventory a also it's are appropriate levels secure to trying the low. inventory. was turn. They're are world And their to surprising rebuild accelerated with inventory And levels people higher trying

just So we improving and look forward. of was positive certainly another it's there. strong sign an think the economy book-to-bill I as And very

Alright, David. please? have Can question, the thank you, next we

from Suva comes Citigroup. question from Jim next Your

line Your is open.

about out, lot. you. are being When your comments, and normally a the see shortages than chip orders lead Thank lead stretching And there's comment the times. you made Terrence, in a times your stronger prepared you that

be times, just versus put because lead seems chain bridge lead a your times issues could just So your more Thank us you it customers fearful you orders they're or stretched normal replenishment think ordering they help would times? supply inventory kind can just are it do beyond that like why if lead of in of you. normal, lot is more

Jim, of Yeah couple things.

So isn't really automotive let's type realize system, adjustment it's times. in there lead

of we our pain some six When that, but And would of probably our not the have anywhere do business that semis. to some out some business, than is I So time. the say rest just weeks. of points areas, part little we're our and to it are further typical, lead times in in in bit four close a

do I economy the on, people low down replenishment down have you to and doing think volumes is better. going did take

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happening what's see with why that's you think I distribution. So,

moving think product significantly, pain are that we also in lead out some times you markets some honestly, that it's our finite hot, those very very in I sets that happening of and aren’t points. have see except where

please? have next we the question, you Jim. Alright, thank Can

Your next Junk comes from Luke question from Baird.

Your line is open.

morning. Good the business to your hoping you storms to speak this of vehicles, increasingly the of opportunities of electric key could comments some in on, and hardening, focus similar? Texas proliferation getting on it was just of in discuss in the play relates has mentioned I course if grid Terence your that is key role we're that to terms the which as questions renewables energy in area could you an winter,

solar growth that renewables. solar slow taking EV grid. really driving the is energy business Yeah, applications benefit you drive this how and important but very would is also the wind to It been X% that connections, has have seen you is so do past get deal share our the the exposure hook applications, usage over factors as is really also voltage need really the in is it grid done pretty in business have very into grid, have hardening certainly we this nice the team around well where saw quarter, energy you to growth in as electrical those into our is has repositioning job which not that are is, the that. off the our where the we the we And core where play pivoted is back comes global. along And what's portfolio and our renewables would that really it, our a we've seen when in panel business been you been, very and is but really growth very our there. energy into consistent that nice and as how infrastructure has it that said, come And, driving around a connections you where that segment, with industrial of much Historically, our year on grid. energy due high key there the the growth

certainly, sure occur our how what connections we carbon So planet. our we from those with the benefiting share product the excited is all do fair And in get about. those set make we pretty broad neutral make are on grid to initiatives get we sure

next Okay, thanks please? have the Can we question, Luke.

Next from Todorov from Research. Nik comes question Longbow

is line Your open.

are some years. current everyone. time Good some reports because seen over thanks. much others the morning, OEMs from away better we've they that the in shifted environment, have than auto doing in Terrence, Yeah, just

the supply just know you see we issues with customer but I do shift As any away on deal you and auto in broader chain that's more semi on time? inventory side policy see from changing, how the side do structural

you is, we're meet tell would demand. with with I What what to dealing trying currently, we're

the significant have shifts. seen be this, after OEMs Do not We interesting. reflect it'll

lead be I production in they think customers, have fab. the don't but of door. that realize right just would product cases, some think their out have time a making our that'll discussion about they semiconductor with have we our when we a And, the sure now is get company customer some on focused really

we is different. stress system. But strain there's what in certainly and do the So,

that's that big we're of some not down OEMs And trying And on. pretty tier they catch Xs levels also what just role to play inventory in low. equation, and are the that very all took a up the

we Nik. next Okay, question, you Can thank have the please?

And Securities. William from your Truist next question Stein comes from

Your line is open.

on or you this able for Maybe costs. essentially but costs costs word a used least time, also labor was it Terrence, input is to I I noted And going I'd over tell who that's example Thank to takes to you us related costs. costs, expect you'd you're deflation describe something maybe or the in it that part think about think Heath, back clawed like it be to something at to you. inflation chain supply just to material your it seeing to in you it's whether think that those be if that that's you is happening something you're fine, is pass through or whomever of was customers?

we're air the I inflation battled The now has side. inflation Heath. question. and is is freight the there's freight through to as unique feeling that's variety on the biggest freight and of chain. Certainly, take including a reasons right higher this the not I terms we well that's publicized Certainly, William, there in for will overall forth that. supply across TE. And been significant think of been that, so

quarter. half here directly little that's that We past are Texas seen are earlier, costs, we've towards continued as of prices with we've a those, were we and move monitor as the the particularly those creep our input year, weather attributable higher in of this to second then copper to issues up. And resins bit we seeing some pretty

of we hedge have we Now metals hedges in place our in in cases, some how cost. terms

months see hedge layering see slower for out of don't XX% So exposure kind metals. about P&L, XX out about our you and that as you the of we a bit in -- little of

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different mechanisms the a I'd and there's way depending the in portion no I'm say of surcharges put of types place. we're But prices business, will piece say, claw is and seen right we things. There's these that the of utilize contractual upon as tie some we cases, have some business. some have ability And and to XXX% then, engines are ability issue timing also we in here discussion Terrence channel, of outlined questions certainly, the it's of productivity take we've up, pricing cases, with with for that terms within come broader the in a I In writers, passing aggressively. customer ago, do to to sit going now. offset But help through a in of what a to callback, couple terms place In inflation of it going pounding think we're more in back to then it. through inflation that

So more to come.

Can Okay, next the question, thank you have please? we Will.

from Sheerin Next question comes Matt from Stifel.

is line open. Your

solutions industrial question Good area, forward. the thinking particularly around we should be about how morning, margin is operating My thanks. everyone. going Yeah

the particularly down you in talked for area. reasons year-over-year, were weakness about You aerospace

Sounds like see it you're bottoming, sounds continuing like in the that's industrial to market. growth broader

function volumes margin that expecting? here, Thanks. still thinking a targeting we about I some or we expansion been a what know high is So from should there's here of be should benefits restructuring it be you've teens,

margins. Matt, journey of changed this multi-year of first Well, and in rooftops, question, plan a of in of is Heath. as there I in in is terms as mid nothing has growth our footprint lack consolidation were to get of point year-over-year, the outlook nothing terms the get take multi-year to down, from our a of the operating -- changed growth a thank will quarter by we've by to high that we where very And commercial industrial businesses profitable Certainly on been that piece lot all teens within segment. impacted reduction is has margins. the coming segment. of involves very pinch to mix has terms the of a right or you. And the the that's of a of it aerospace

that's factor there's terms the some have going we costs restructuring that of how into we locations. on, cases in do some things when However, moving new ahead other well, about of think as as in factories the into savings this we're of

supply segment In not from was immune challenges. addition, the some chain the of

I into that we things. second half of am there. as of the variety we will confident move improvement our a year So see

question, have Can please? next Okay, thank the you, we Matt.

Fox next Advisors. Your from Steven is Fox from question

open. Your line is

this, share anything morning. there's if it more the gains normal. across Hi, driving within gains? just you like common misinterpreted different thanks. than Good I that while thread there's are I if was to sounded might any but share segments have mentioned, point gaining or Thanks. share would you you're market curious

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advantage are -- but of So market those some make we highlights, only key our want the there's did results. in recovery, to share to in some areas, sure also market took we had bigger that markets of not contributing also

Can thank please? question we Okay, you, Steve. have next the

from Research. Your from Rod question comes next Lache Wolfe

open. is line Your

Hey, this is Shreyas Patil Rod. on for

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we the next Can have you. question, please? thank Okay,

question David Next from comes Capital. from Williams Loop

line is open. Your

vehicles. the ask the Hey, higher shift to OEMs. maybe on more have letting good for mix from morning, even and pivoted they the Obviously, thanks me luxury the question. to automotive end, Wanted maybe ask

move semi impact maybe vehicles revenue range shift that see you towards do to as how we think back a there? As lower mid-range impacts mix and eases, the margin that shortage maybe a

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world market. those in aren't as as they the the And real elsewhere some North trends be in may American of

the you, please? David. have question, thank Okay, Can we next

from of America. Mohan Bank comes question from next Wamsi Your

is open. line Your

you TE taking follow-up. on and if it's days Yes, thanks comment, comment I I associated Terrence, with wondering could from infrastructure any amount how potential you. the tax you my know investment given but was early or proposed puts particularly of in plan, EV the headwinds infrastructure still takes tailwind the for could that a Thank hikes? if for might be tax any versus

out Well, on equations, there's obviously, those of both a there. lot sides of things

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more So, the it's I impact pay but solidified look get there, just at we important things cash not taxes. but to as think where come to there,

And so stay this concern but tuned. a at huge point, not

joining Okay, this have contact thank everyone for you to call questions, great on at Relations the questions. please day. Investor further and we I if have have morning. us further you And Thank TE. no want a

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