TE Connectivity (TEL) 2 Nov 222022 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the TE Connectivity Fourth Quarter 2022 Earnings Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the conference over to our host, Vice President of Investor Relations, Sujal Shah. ahead. go Please

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

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

that portion sections discussion of we of our In XX-week also results as appendix see release press the discussing address to certain the results some the reconciliations. this well our morning be with I want QX along the impact of our extra and use in both you as you that and related slide will extra on basis and slide the in addition, and results review of these website and week the remind to presentation, found measures the our the we'll release presentation in Relations press our week accompanying can accompanying ask we te.com. XX-week the the non-GAAP during on tables, the of be items. presentation slide The use an the for include Please Investor at call. our

Q&A may the queue re-join we Finally, are have to you and second asking portion question. call, the of today’s themselves if during question everyone to one limit a you

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

Thank joining today. you, us Sujal and appreciate we for everyone

spend of just since that discussing performance, call I seeing XX these like into beginning slides, calls time of like our days before our at to get do some the we're the ago. the with As we I'd along developments typically to some

year well of number fiscal you'll crosscurrents data fourth and results. continue a see perform to from global are quarter showing both and this economic XXXX our uncertainty, we in there points While external

positioned we benefits our growth trends demonstrate of outperform performance as guidance Our portfolio to to how we came and secular our for continues continue strategically the in ahead markets. around our

customers results macro in performance We also financial our demonstrating the operational broader serving delivering and strong were challenges. despite

Our opportunities levels, and want year-over-year. pressure. into significant pieces forward. long-term time, to confident performance Within proactively markets organic am to quarter more keep we impacted up the our To order the in levels a I backlog delivered inflationary implement serve. are of adjusted ability details same short-term by we and per the At earnings strong am our will remains imply as I we and again fourth as have this we're stronger which others are we discuss we majority and mode go solid are growth across And with excited the backdrop, still to I increases that that about our XXXX. growth levels we summarize of with price and Heath our navigate growing, I on execute dollar, challenges markets some back these some double-digit ongoing high showing near pre-pandemic signs to continue these performance, in go will moving on the demand the and recovery that double-digit in results into share to being that financial in call. team as outlook overall negatively the to a also continue our highlight moderation. be all-time headwind

give headwinds year experiencing. you what on were our quick exchange and adjusted sales year, details with EPS versus the backdrop, and organically inflationary from share some With records up let prior and adjusted despite For XX% earnings pressures. we're currency foreign up XX% the this per full adjusted sales me

reflected in front. the end and our backlog. different across some markets this tanks orders We're we First, serve seeing on some is the in orders putting our

and below have COVID, we in our that supply book-to-bill levels to backlog is see the time chain it first we're the since to in higher starting one for reasonable stability the our quarter. the see With

Our pre-COVID backlog remains than strong at $X billion, which times two is levels. almost higher

by show OEM down auto industrial positive limitations, If levels are transportation on In segment, supply still transportation, to and demand trends. continuing remains orders order and production by production. constrained end of above you current click chain is

medical we to both In reflected still growth. we markets supply to inventory the com a seen well the our segment our adjustments expect orders, growth along in have both are of pre-COVID air So, applications communication for industrial XX% cloud lower reflecting with on represent growth our orders segment, now orders Renewables benefits our as decline the from the areas energy And in sales business. energy in Based capital In this have long-term in moderate, we XXXX. center within continue in industrial in and spending, these continue to content air the chain. favorable with market be the outlook the market. com upon production as we recovering and wind solar as appliance levels. to is of recent segment, data market will along developments, customers seeing and

globally. pressures true for We that also our that costs this use is higher continue impact energy as resins, manufacturing we to as well particularly and experience for operations inflationary molding

last from and on think positive offset additional in his And to we've is and We ensure the and costs will will implement cost we're we contribution this XXXX the section. to are our demonstrated, to I dynamic. seeing I take structure consistently in environment additional with actions what in we market to margin line provide slides to continuing details the later to in Heath these inflationary expect highlight turn thing before the price/cost want a price have increases

to highlights slides quarter slide into as I'd asked you year outlook. I'll some now three fourth turn full get the to So, and our the get in well first the let's into additional as and cover quarter for

earlier, an week. mentioned extra Sujal quarter As fourth our included

was was basis, up our our a operating $X.XX, were adjusted Our fourth on and XX.X%, reported share billion, this quarter year-over-year. earnings which sales XX% are and per XX% were $X.X margins up adjusted

in the was year-over-year, $X in cash free this per the up you our better were A get adjusted $X.XX. $XXX extra organically earnings to record is If include to and sales fourth quarter meet needs thing highlight did slightly comparison, we to million volatility delivered share key returned of flow that to billion to XX% quarter earlier with the customers. apples-to-apples week a fourth were over and year, of quarter, previously, I discussed million which deal demonstrates it want cash and our strong with inventory our $XXX model to do supply we the you the we can and levels over in we increase and ensure generation chain we shareholders. highlight

free our you'll to decided reduce inventory actually in our down see were this year-on-year current our the action the improved in our the in the does to on environment hand began fourth flow chain in approximately in supply quarter quarter, We and sheet balance more short-term. our do we by quarter. we and improving, margin the days see million pressure but As management in inventory $XXX this get believe was cash and line prudent our

me let highlights upon now full results. year for So, additional few touch a

margins with up per million. on transportation the communications currency was $XX.X exchange record billion was headwinds in share approximately single-digits Sales XX.X% XX% XX% XXXX and and $X.XX, $XXX the results were year-over-year of which demonstrating industrial adjusted X% up this prior were with reported was the operating and high Adjusted a positioning despite communication up record organically a portfolio. and were double-digits industrial Our year-over-year strategic of earnings at of segments at expansion year. versus basis and of fiscal our

on we year, full our owners. returned focus business, was the For to as dividends, $X.X and between the shareholders share investment return well capital as organic buybacks in as of our billion to

for sure me this do upon quarter Now, out highlighted guidance. you. guidance. And first want have as make to already of moving baseline our with by pieces XXXX, wrap-up I the for a of together the I frame some want right we incorporating for to I touch the let financials

$X.X the sales and four fiscal in billion. of sales would when you would quarter $X at quarter comparison be against this, against of comparison first the So, billion look in XX-week of the be sequential the XXXX year-over-year

decline sequential typical sales EPS. decline by and the the to So, if you The look quarter. foreign volume quarter organically approximately drove year-over-year, from the this ago. the sales down XX-week a despite FX in XXXX, decline approximately $X.XX sales approximately EPS $XXX $X of remaining Roughly first seasonality as a $X.XX, expected the billion, basis of of back impact our from and $X.XX and includes XXXX, declines billion approximately the up volume is moderation. due half do on split one driven it at of headwinds a topline I million tax of fourth mean million sequentially a between end be to communications guidance currency, we $XXX XXXX, foreign year in sorry, reductions by as proactive X% versus which in which going from of slightly year-over-year exchange bounce we exchange, we in is $X.XX higher XX%, just per the to well and mentioned, earnings quarter will reported and -- look I in with be up our headwinds. at rate temporary is we currency are and declining of inventory market share Adjusted expect When from

teams progress pressures near-term we have on While making control increasing can year that partially this our some we price driving to increases we offset have non-structural, pressures. inflationary are the past with what been

in a lag to recover and we've our the through there transportation, past, mentioned price. in ability is inflation As between

into teen sometime price implemented up second have increases margins XXXX. do transportation additional of high to in the which We back the again half

growth, model. in cash thing in our While generating artificial changed outperformance energy the benefit markets and remain long-term value strong including see content crosscurrents not the high smart as through we We growth. from benefiting we model applications, to the well as cloud and speed We're from are automation, business applications. from experiencing, secular driving to and creation continue we're renewable one margin through the committed our trends has we're intelligence expansion, generation position our is working our electric that vehicles, factory and

that, slide, with to wrapping the and on orders. turn So, I'll let's slide more highlight some details four share up

quarter, fourth communication our orders and the demonstrates this For and and both industrial billion in transportation reflects also moderation resiliency segment. were $X.X in

little from continues reflects impact back a demand is to autos inventories of for our be historical or resolve to produce, for of as providing increases backlog backlog dealer push a get to Our I begin and customer backdrop $X X.XX, customers. This from book-to-bill End outs seeing production patterns. want OEMs had strong bottlenecks higher we favorable supply than cancellation chain what a we're very XX% demand In to along our currently emphasize up position. levels. favorable transportation, year-over-year that billion with can and

in in declined segment, in orders sequentially and to our electric devices speed content per $XX do to XXXX to globally. center book-to-bill position and data Despite recover with strong year-over-year vehicle center range to content medical from at to pre-COVID. per devices the customers. of and moderation appliances and remains and and of gains And a $XX vehicle cloud for adoption continue segment, expanding AE&M from data growth Year-over-year the market we had both this global outgrow AI market to businesses leadership communications levels. businesses, as its expect further adjust in expansion content inventory high due the decline order cyclicality, share the data in Our supply In fiscal chain over We cloud. driven and the levels our implementations our and from industrial reflecting as these by due increased growth continue data in benefits vehicles business and our we pre-pandemic was expected [ph] X.XX. expect

Europe, let orders of a color region, China America. we're Now, with basis was North a me in provide seeing growth while in basis, single-digit sequential organic America saw what well in we flat. we X% year-over-year On as essentially Europe saw orders as and a North in XX% in On XX-week China, little by geographically. growth declines

well into get as over orders of and a highlights, it that as let with financials. as Heath the turn and some So, backlog, on information segment he'll backdrop me

morning and briefly now Thank I good everyone. in five you, seven. the quarter year-over-year on Terrance discuss second will slides results through

organically with and You a I organic all regions. can sales our up performance business sales XX% transportation basis. year-over-year, five, were on organically Slide on XX% across grew see slides auto the about talk growth the will XX-week details

by driven X% the optimization adjusted with driven growth of organically share the level In in growth, significant EV. expected in short-term We for we declined account which content importantly, saw through vehicle with provide activities. well automotive. continue auto the and Electric were price with areas with leadership the range our to this organic XX.X% we to X% outperformance XXXX, gains Europe million increase transportation, To XXXX XXXX. to global per context margins by we inventory Terrance for planned At North impact production in content transportation above regions by our XX% all from growth XX% earlier. outperformance of with mentioned produced stated has operating Xx offset now and grown segment in sensors, increases units and XXXX. production XX expect reduction inflationary America And our year. margins commercial continued focus vehicles to portfolio our market and our EV in and In offset actions pressures further our be HEV X% reflect nearly timing of production market along

we as interventional year-over-year organically margins supply medical to industrial segment, to with and applications. work in increased double-digit XX% devices, market continued slide, Moving XX% were improvement intelligence growth to volume, market chain implementation share continued up segment factory procedures and And and Industrial price higher up sales organically cost driven the and we challenges. also actions, driven by high XX% renewable medical XX% X% sales outperformance organic increased year-over-year. up gains market In all applications. through slide communications. organically next was growth defense content cloud benefits artificial by operating with organically automation the Adjusted with and com by by In in applications. Aerospace previous next driven for and growth The had and energy, XX.X%, organic increases was and of data driven continues the saw X% penetration growth year-over-year. primarily actions. growth the speed in We saw from air. expanded regions our equipment ongoing device

end fiscal declined business appliances business. that reflecting adjusted in market the continue were margins expected reflecting will Our organically, XX% into in appliance Communications XX.X%, moderation sales lower operating this the XXXX. the

slide to turn provide QX you on financials. I'll eight, If the where more details

million, QX mentioned we billion margins, bridge Adjusted the an that a XX.X%. week on $X.X extra year-over-year and and earlier, had Sales sales that prior and EPS negatively was income by tables reported includes exchange up operating As in were $XXX currency sales, for adjusted the operating impacted appendix an provided week. extra XX% rates year. of basis $XXX million versus with margin of

We exchange, mentioned in of are by being the near-term impacted pressures reduction. non-structural inventory foreign previously inflation, and the

continuing recovering we rates, increases. While are be through proactive pressures exchange can't influence on inflationary we currency price to

of income impact and million Additional upcoming fiscal back to margins was $XXX the run other margin of fiscal rate most our move for we QX half transportation reduction restructuring lift the and of closer high into acquisition-related a in $XX $XX do price and segment this range year we increases GAAP the will of while teens we margins inventory with And second helping as XXXX. back has effect and margins, go included as million in near-term to on half to company expansion through XXXX. charges were million charges. and know, XX% you the operating expect

to year, For charges ramp approximately QX up the with million, were restructuring environment. in our the charges $XXX in expectations. to restructuring market react full did We proactively which were line

and Adjusted evaluate during GAAP related quarter, of related a more EPS included to the tax EPS XXXX of we the quarter. for charges discreet be weighed and $X.XX move restructuring fiscal continue was first $X.XX will benefit the roughly expect forward. tax XXXX, cost in the actions benefits fiscal I to we heavily was $X.XX to with the charges fiscal and While half as further be will year consistent into

restructuring and approximately and adjusted had was fiscal we XXXX expect and XX%. other we to both XX% roughly The tax $X.XX. QX Additionally, effective rate QX in our charges acquisition of adjusted tax effective for be fiscal rate and XXXX,

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

record rates year-over-year. fiscal XXXX. be $X communications XX% to comparisons organically year. currency headwinds into currencies, felt XXXX XX% basis the the roughly XX% XXXX growth operating expect XX.X% in fiscal half EPS on for and X% and slide year. sales billion segments. to a versus approximately with of other fiscal basis exchange to points year-over-year of expansion and billion $XXX our Due Currency of strengthening prior $XX.X on year-over-year to approximately of year-over-year to by this of reported Turning further in were reported at were the be industrial rate expanded dollar we million sales the XXX impacted nine, exchange U.S. first headwinds negatively fiscal against up Adjusted the a equates approximately with headwind in margins adjusted $X.XX This to

with for through flow, dividends. cash returned free into was year approximately share the over $X.X and billion shareholders cash flow Turning $X billion, to buybacks

and to two-thirds remain of to aggressive approximately cash investing flow been for in our me continue is We get We buying own shareholders into in Near-term our of use performance stock past free before creation wrap-up. disciplined this third delivered we our advantage one and and our taking our of have organic questions, strategy which opportunities. in return remains to we year. And value consistent, strong long-term capital back use let acquisitions.

ahead this we I have Our teams volatile And have of opportunities some this us year. continued in the customers. to excited about environment have serve headwinds, to near-term our am fiscal execute well effectively while we

drive portfolio the will performance. of content and positioning Our

can support through EPS price we reduction for continuing can sheet capital including investments strong and trajectory while inflation, that cost for a further growth, have also to to control, offset fully shareholders. We initiatives, to return and expansion increases actions margin balance growth a

about lot excited be a So there. to there's

open it up Now, for let's questions.

Q&A directions the you please Angela, give session? the for can

the of Kelley first from line question Instructions] comes with David [Operator Your Jefferies.

open. is line Your

Hi, the for good And question. Number taking morning quarter, moving shifting of demand. reduction in the extra weeks in team. my thanks inventory and parts

into to earnings So, hoping the XXXX. just I maybe dig was trajectory into

or walk So, through levels? us could give margin a XXXX you sense and exit us sales rate of

of a is may confusing. to anything is it. I'll This opportunity just out Heath, as you. as lot moving across take this come And clarify David. laid that the Sure, appreciate for We I parts

some we As reflected from we saw and good lot of saw certainly, with you enjoyed pressures. we that. a that we we flow year, But that And exited certainly benefit and order dealing in sales. through our volume of the still are the

inventory we've on to in XX% it down quarter, our overall have does take healthy in elected it days natural inventory inventory balance, accordingly. line volume that ending our we with back But And importantly, XXX a through the metric, more we bring We a our the as script that margins hand would flow over have level. impact on of did was see of balance million. was in where

has it the So, good benefit in that. obviously we $XXX flow, the about of quarter of which feel the was And nearly record a cash million.

sure keep forward. So, on a the that foot check negative P&L. in have of stays we're impact we going to move that in near-term that it does But making our as on terms

The structures us. other so piece we is we cost and particularly buy heightened are around and is pressures, in oil-based still still are hitting driven where seeing forth a that lot inflation, price of transportation resins

discussing that other half we uptick to the have have agreed the timeframe upon first go So, parts we second already increases move the us do into a effect planned from nice and and and the will And half are for we more QX, will January margins bit less in or we seeing have And impact both moderate, year. had of as of been moderate that appliances expected. have of sales. little orders -- to for communication the for and openly that our on started as and been segment our year We segment dilutive to transportation the that there have that a communications. our does a we've throughout expected see

there's few things So, a direction. heading that

strengthening side, Now, about is EPS, on as FX, and the flip think heightened. the on we dollar the

feeling hard, transparent just have million early the $X million half July, We want we on us in per what margins -- does calling billion that snapped -- when hit be an XXXX I we and the that currencies $XXX to and back we're our to and with preview our first owners first working while line does quarter. the the exposure but doesn't $XXX are recall, was can't We as the impact roughly share certainly now we're quite of an with FY had that's that and of given on in be the you looked control If year. here. about reality. hitting earnings a analysts That the that, going stock that it in that like, of

that of software So, our not moving we're work parts right-sizing, things as We restructuring there's sitting That time, some an is footed. through the about way year. some activity macro mentioned we At some there the flat environment. continue. in same sort will anticipated

question the certainly know. follow-on, appreciate I if there's us let So, and

Thank we you, Can have question, next David. please?

from Your Mohan Wamsi the next line with comes of question Bank America. of

Your open. line is

share you. about thank transport a I much. if that? could fiscal some could and and morning. that was adjustment, And suppliers wondering in and being well? more GRC for on you to these ODM Good And versus comment can how if production if magnitude XXXX at if little the was wondering you TE's the trends talk color Yes, the maybe I of an the potentially inventory as backlog in Thank XXXX of you I inventory was comps, so much you was performance how hyperscalers. on also and outgrowth could, adjustments order

morning. and orders want orders talked talk talk about we're good me about again bit. Wamsi, to know let And outperformance. you seeing and across in I'll then talk take little Because Sure, that about I a I'll content I about what comps,

see around book-to-bill continue and below supply as a us. expect with in chains to would not surprising we world our a have just that's be that to First one backlog, the improve one. off, building I bookings honest to been want to where having dipped book-to-bill And below

down would with -- they to make us. we work have sure have chains expect backlogs to including our our as just our So, own, that want we I supply that really customers improve,

this, demand said we're I And aren't that that. want into don't people we way. in or off because across make our script, seeing to really push So, the outs any dropping read cancellations is not in markets, sure seeing that as meaningful I

in growth getting is But I always resiliency. TS does I think think for cloud those shows I been other we've talked probably those moderation with segment, the communications, our and think XX%, appliance is we've customers already D&D backlogs ODM excess IS, the that off. areas can you that XX% in could more outperformed And Clearly, that think that CapEx -- been and a see it then I are think see In comps us supply inventory it have trends seeing quarters. book-to-bills if look CapEx you the always one getting that what's as we're the cloud about that's it I And our impact expected. by we've CapEx growth you COVID. And normalized. had benefited see are magnitude But you'll market the we've that you business. cloud chain was to and the rates. it have in in couple of that. worked that off levels, And moderating well to important from during it's

So, of order both those patterns. we're getting those in

outperformance. me let around part question turn content Now, second to your your of

When That there. anymore supply We haven't for from that you can't auto I million. only Sujal we XXXX earlier, in for $XX high the and we as feel it's disruptions, at what's how it's range. important chain, -- chain of of from been that XXXX. our of actually the I impacted built. the revenue said will that much was And used end and aren't to look we was content -- of the think high we told you be million end X% is, the at our And outperformance impact the is of revenue what above also at very range $XXX be end X%. range, a expect tell about about has we I good supply the growth very high to

were seeing. from don't any we auto people So, inventory comfortable what orders backlog. chain impacts Certainly in seen with see major we're the more and moderate the off we've getting supply working

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

Your of next from the question Fox comes Steven Fox Advisors. with line

open. line Your is

your a Hi, the about wondering maybe this walk not you end markets Thank good new what fiscal year, since if was you're year just point morning. full providing time? through in you're guidance fiscal you. at I for could thinking

Steve got there me it the surprise. so And moves. the global don't Yes, planning there today be color volatility for how a providing first thanks, business certainly But by and we're the and think here, segment. that's macro upon we on it macro, seeing is the and quarter, I'm we're how in what I do is the let can changes depending

XX million been the due environment for transportation stuck XX sort the it's of units, to around transportation, Europe, still been challenging really has all, greater is it extended think be get we supply up constraints, about certainly really our all produce. than the of going COVID. a that where million, you has First environment talked -- ramp how the around I in they things couple nice whether past production China semi improving, that of to And can lockdowns keep years. to war demand production talking about customers see still in some what it's it's of Auto about they supply can with and

demand for the see being production still end auto So, above we environment.

electric we we we're to to nice of this said, still as that above And increase outperformance position ourselves also Wamsi's as production. and global expect, of So, market as total year. leadership in the do setup, this I as is X% question really the certainly to year. have penetration a going X% see position going driven go be we where have electric by versus the We continuing we just next percentage to to vehicles into a that vehicles

performance a market the that's and it's emissions commercial in standards, before. fact out increased China you're this year, could other is there. expect have that around all the the market And driving really through three year would we been seen we're that transportation, decreased commercial double-digits versus The the transportation an putting key And you as which regions. that situation transportation, China, some of market that market in all we've

And I from a as at perspective also still and And about it's we air In on strong recovering. very at we a And are increasing it's you and double-aisle markets what's of this com to demand medical backlog a the that nice are see aisle heard aircraft me and I single increased year, setup. something levels aircraft. think this transportation on tough you market some could XX%. orders. So, both aisle still at air only look in you production double that still XXXX. a year. upside are about further orders, year, And we've these had have talking are framers air, next expect And look when when from and is and build, markets some back while commercial was industrial, talked com growth pre-pandemic in

mentioned, growth XX% energy that solar from and and energy of script thing sales The are year very our other the strong business, and renewable. I double-digit our is wind remain this strong

help weakening we And remind dealing everybody going to you're performance industrial company's about CapEx with this we those they we're that's growth step I will in moderate. step we with. two expect this on going is also good higher our this for do that coming the And as been market. to years, year. data to in see down there, has I comps. as business D&D new it we down And really So, And which Wamsi to trends that around in expected in and where connectivity, impact in year. have want just outperform continue been the But had to cloud that talked that hot we that's And be this devices, and down we as communication, hyperscale going And just factors first expect I the tough part in have as have quarter. market programs supply appliance chain year based we sure we're expect extremely from equipment of but it's strong adjust two and will question, further com. we're sales us was the applications reasonable see in our year, one the then tough us, ODM the the upon to focused make robotics, -- past Ethernet are And demand. market fourth will to think and and that to growth the

know but it's I lot, sort macro a question entering So, XXXX. as you a asked we're and of about gave the I thinking how you we're simple

we Thank right. the All Can question, Steve. you, have next please?

comes question of the Matt with Stifel. from line next Sheerin Your

line Your is open.

you're circle back to and the looks like Good much basis morning. thanks. million. like reduction, it down gross the I XXX QX, it $XXX to with in of that points in down margin specifically, How And Yes, QX. I margin in you basis XXX inventory guiding were impact that roughly looks wanted mean year-over-year. -- gross points

Thanks. And So, that issue how much quarter of reduction? of that that is to inventory does carry to through related XXXX? one QX is or that

its Terrence. Hey Matt

right, our I inventory out. you're we And was I'll that take want that. this to took be So, clear,

it So, bring sort the I on through proactive chain. Heath And down partial have was a about of is factories quarter cost we cloud you mid-XXs, XXs, our inventory D&D and a that supply impact work in in XXX first we have costs first inventory. to as And be you back said, and off, but talked working works as made a issue. running know then have temporary customers, second have our a of bigger action little chain I the as lot it And units inventory our with we have this off, days points the in through our in -- you were be be impact in supply in hand about x, have quarter it'll less running quarter, the had fourth basis it, that'll a quarter. on to higher you'll bit we as inventories the that'll

The a pre-pandemic, markets back as recovery we normal And well to in we anybody. prudent supply get what let's think surprise flow back cash seeing in The we make But niche as it's those coming our line. the And from materials, better inventory which area and it's it still our as chain thought supply macro. mode more something said, consistently. really got we're be impacts generation why made do we're something customers well was commercial inventory more other really chain is aerospace, that a we serving was is sure why, we year. are well as our saw choices medical, only something in in, important. as as don't hey, just the to thing the I in carry as will more is we it I did during it, think uncertainty The to do some

So, that that XXXX. TE in back a part. our impact that line get it with was inventory a on in action that to here margin be proactive will something gross always is it was But us kind early and of and

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

the Evercore with question line next of comes Amit Your from ISI. Daryanani

is line Your open.

you I I do to trajectory going of XXXX clarity you think beyond some Terrence, in December. we fiscal Thanks recovery in then And up margin really lot focus in be stack do the I wondering CIS, back the a across do half. XXXX qualitatively over think think a going better on first provide on And was looks end below lot. half, think on how up segments? to mid-XX% we're transport, could if there's dipping operating reviewing you margins there. XX versus the specifically

helpful? Thank margin trajectory you. really be Just would forward any on going breakdown

is on This Amit. I the Thanks, question. appreciate certainly I think point. listen, it's No, Heath.

into prices later on effect pressuring differential of is have the looking got and cost we in will the of year terms this of margins. we've the already morning, fiscal couple we half that the about agreement talked some about think price that forward go half transportation One into transportation we've second of and margins. as that first already things our As on move things transportation higher to a in what seeing a are we we're margins discussed benefit

the Matt The walked side. through just was inventory that, thing on other Terrence

did imagine, As you amount transportation. we we on that of a the can that margins, accounting take element as it burn disproportionate out the $XXX that hits and puts of million there through inventory pressure is of

we just versus our half about our have talked as half. that as a first about, think second benefit again, will we So

going we second performing talked and So, and about. And on transportation well. very of on acquisitions Industrial this has based vocal we've pretty the be margin journey for couple very things transportation business company returns rooftop restructuring transparent journey that is and for middle the of good that in improvement to been our well consolidations is taken on. that half a some in journey has with honestly definitely we've a absorbed terms done the are and shareholders. of you the The about

strong forward we looking impact those. here making time, pressure to might given dilutive we're any of a be but acquisitions. even high-teens some towards margins or towards journey our on there So, are quarter the there At while progress absorbing

what generate a at on of we and volume So Listen, We've have we've stay high to there good a around was said levels, XX%. that margins couple being never and a that volumes. just those but margins about kind we part of in reminder then tuned our the we your of And able and shows XXXX. can of at it stay basically XX% those industrial, feel trajectory Amit, as enjoyed last it advertised question, business. years north as transfer communications

we're that line, a they'll down be on that little expect modestly top year-over-year to on for there resiliency Terrence moderate. lower volumes at in above XX% earlier pieces mentioned even feel come that the year there, the down, any there's we but Now generally, dip think might given full margins would a But for XX% above which question I quarter shows still seeing Communications year, that, expect do below. be I back like we'll be some that the of would the that volume. we still the

Amit. All right. please? Can next question, the we Thank you, have

line Your Chris Snyder next UBS. the question of comes with from

you. Thank

I the my that So so for and more of commentary Presumably, two-thirds based talk margin transport. of company on more focusing than outlook Solutions, line it translates is that Transport at math. recovering inflation all you're to EBIT majority of from million about more to said Prior the cost has loss wanted about $XXX high maybe price the but on the cost.

color and So Is I would EBIT you. there be about guess, cost Could in any Thank down, kind at we see how the for scope we back that helpful. get of getting should going beyond there to we look of pricing next with XXX-plus higher metal, as Any into neutral? half that least that loss? maybe flat think year, to neutral?

Thanks, Chris. that. take I'll

to inflationary is spike, your its close. really pressures resins, certainly, metals, your our close, I our overall all, Listen, an utility because in back our way okay? for math costs not places. cost It's Europe that pretty for that pretty particularly molds. come main I'll think right. four So math but It's right, run we've to is use the It's we give from and freight props of seen you easy just factories. that, that into, First is

capacity has started things, Some come those of in moderation to of to have see so on as able being back terms we online forth. and

and pressure are prices. resins which We both feeling still driven on on utilities, energy inflationary are

we potentially mentioned, you anticipate as begin year-over-year buckets Throughout through year, two-thirds of certain pressure. to going to to continue we about that any -- the are lower TE have will that as pressure we of incremental and in price. on So recovered terms have the basis that even we moderate inflationary

you So couple that segments, break a as hundred-million-dollar a it little different. leaves When our into still of bit you us, it's mentioned, gap.

about negotiations. for So there of do price and both contractual covering -- in timely we more while FY it's to partners along can because And is through easier pass less with our distribution partners. go when distribution efficiently regular -- more more out they're we simply through and company, you're that the maybe reopening it going and more channel segments, nuance both And we're it's industrial increases those you much more XXXX communications. in do two-thirds in in the

the We platforms to OEM we recovering and tied as both Transportation inflation forth. contracts last So, and not both tougher been more price permit more are those contracts price. work year, through got it year. because prior those through just so is you've gets where but direct have to more

you out. inflation, now. feeling discussing recovering is go really which won't months or trying transportation times you're that for that's everyone And we're when to some what things times many effect in world so six And into are do, the nine

see of in that, year. of we'll price second And we're the Fortunately, will to fiscal that two-thirds half increases improve. on later we certainly this coming up coverage start feel as do that do pricing those I

our first stay we as above year, as the of our the we confidence we we for the will improve to that half Now tuned. But back work and gives our plans more go that from get the say second the rest year. inflationary half fiscal -- we of would to we make way sure. where move -- into I as as And move pressures, half the ratio us

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

Spak Your RBC of Capital next Markets. question with Joe from the line comes

line Your open. is

business. in on it wondering Thanks healthier a And think some first higher was be so fourth details quarter. give if was in mentioned still you stepped-up much. a going more little level the really Heath, the on restructuring. like I like it to in your bit guidance, It level looks is the you quarter. could I restructuring transportation that looks

looking on bit a more to in what And restructuring when actions, terms of return you're little more payback. can levels? for a just normalized those maybe So

in took than XX for we more lot little was $XX over FY -- transportation. it little towards thanks the of million Joe, million for did as we XXXX, Listen, the $XXX charges noted of change that And Yeah. quarter. of that question. a in we was and prepared in the the comments, do fourth geared a

footprint way very Now focused working factory programs, on which restructuring we have been through has our been consolidations.

I transportation to line with we of in line. are been Most the two taking what that ahead continues for Those anticipate of that start three-year make somewhere we Europe taking the in European are Western to when of a first segment. took that we lesser think footprint you Industrial we've quarter, payback in view underway certainly The versus in a are in you're off payback want our more to European consolidations, that. to geared charges in sure about we've taken towards more and bit either period. footprint view, that of in that I of and, and in been is the us certainly process you pretty that finished, fourth were and some the for track that charges we expect had those quarter talking be macroeconomic on or extent, would and somber those the getting a when clear

across and anything we and do it both in then to with won't not disproportionate Transportation we're markets, in point that rebound going to TE, pinch a Now, segment, in capacity, to selected it applied deal be can't universally certain auto will a places. a our couple but other be of

cost more this move focused as front. some be cost to come costs to out. on want here think we the our reduction, on maintain come will margin So, to and We fixed we our nimbleness up those cost, lowering want structure importantly, forward I with structural and

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

Your next Goldman the of Sachs. line Mark with question Delaney comes from

Your line open. is

be could the morning. the view for company making perhaps that underlying customers taking than question. some the offset understand And to your there the Thank Thank take want Good growth very be you that XXXX any content the and what's target? X% higher much I this will be you. could reductions X% will think of making to content Yes. that you do inventory growth coming year?

look and think I vehicles we production to us you them, And us, That with and sort the we our and to Hey, and do expect high said, know setup And electric it expect, of big we'll growth. end see that of when chain driver and in to it's we that has be is which to, has to exciting do of global continue that to We we auto, is levels. still book-to-bill we content to drive off from assume the I we're have exciting that acceptance to as that major a stable would mix with where range. being seeing, the above as we orders X% excesses very traditional broad back say grown really, of view -- when you at at that in penetration where Mark, more it, more gotten that, when our supply -- make what comment do the see and of production. don't And you view, and about X% has thanks the stable. vehicle electric when a it's we I the question. look at especially we Heath of talked for supply also chain the it's would look just our

we're bit could meaningfully, that. feel net-net, If we supply So not chain. little of a that change good maybe production right expecting now, was actually But pretty to create

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

line of Your comes next JPMorgan. Chatterjee question the with Samik from

open. is line Your

are taking Samik million growth ask transportation This Hi. for underlying wanted vehicles auto IHS a XXXX? I your X% Sumeet Like on like to currently question. Chatterjee. on is XX [ph] on the Thanks produced. production growth, forecasting market, is to what for that? expectations just like nearly What's for my for amounting take relative to your Thanks.

also number be the And think at be a to in which be I rocket bit We single-digits, sort up. for include think up can important little far Thank we be expect talk. XX saw increases. production say. seasonality don't view will you be we of of and And low little question. units a what we be But times, made it's first you And net-net, we it I going off in million so might know and fourth you is a XX it. the different the quarter don't there I We see how in about it million production think will of how and made units to ship of talk vehicles, we quarter XXXX. don't light what's on

right how demand see in now of the the as excess make OEMs So production. think production that's that's net-net, to I try fulfill sure they we

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

Your Jim Citigroup. from comes of next line the question Suva with

line is open. Your

I of that, sales parts? years markets. the XXXX we thinking moving all time on about with parts the I full either or any little structure and company you as bit little give I a year typically Heath you. the talk and for of on moving totality was then this level, Terrence But inventory was at preliminary more of Thank look think are thinking of or year, out because I thoughts or next a know digestion, bit outlook. cost heard and Terrence, on cash the or the the there restructuring, end a book-to-bill margins lot flow kind I

Well, what guidance in we're FY because Hey, what were than -- we've to provided a well Those XXXX we numbers. for of Heath. stands full where -- anticipating not have foreign terms like year be restructuring. Jim, certainly, me, few other excuse this careful say, is as got currently as we currency current buckets

we a the cash free do had FY in the perspective, things little expectation largely provides bit of as bit color listen, cash way versus record half. up flow you talked in to half that to kind our sum will of we P&L. and flow that and cascade that little a and very lot the today that think here, you through cash And for From about strong our improve finished we've have down inventory and quarter We expect is a year margins strong second of first reduction. a a I hopefully, can attributable XXXX. was

opportunity, a feel above investments That CapEx front our are good will applications should confidence cash but cash back of not still are of money strong We line. we FY are give good a markets where shareholders, lot just we feel we to and the organic the that general, fund markets. all the year deliver the that you to return we XXXX. we about revenue opportunities because about can in where And very outgrow some that in I in and fund need us, and pretty still in flow

that's about probably at than that's I you more point. know I So wanted, vague all but you give this can

Thank next you, All Jim. have right. Can please? the we question,

line of Research. the from Patil comes Shreyas with Wolfe question next Your

open. Your line is

Hey, thanks. on maybe was I just automotive.

out of poised six those than what And to recoveries some talked around that ahead, especially of over about just And this ability I even potentially position sounds about I'm some underlying the outgrowth content growth? to price better points be players as stripped would at You how that are growth you you're sustain the curious market get of confidence think the It are sense like look that? And the what your a then you do as we just was largest look content of gives EV, the year. OEMs that that be you content amongst points. with kind of if thinking or OEMs? in to six seeing you big expansion, it

sure. Yes,

my answer earlier, So couple apologize on earlier question. of things, I the I and missed to so it

One but we talked the things costs get content, of and is about. benefit have will above only as being that X% we for into the not year we've this the price

Transportation So our and Automotive look get I and out missed alone, we electric were is the earlier. in $X wins that on XXXX at there year framed element vehicle revenue those and the When of numbers we segment this as our program billion.

the how consumers the what made, -- -- consumers variable. by at wins. build today. you it's if that the bigger we are have, that's look the revenue, we really, said those is know And cars we today wins, And have consumers what, the cars we I the backwards. platform bigger sorry, we our what when capacity, And want, the in cars momentum what that's really, billion which So get the take $X guess wildcard -- how

places a very the face world. let's US, in third cars made well won, of globally. we're in at when it's the electric net-net, the only look momentum here feel China, it, positioned the programs we've you take about like know where And we as global which OEMs we the that as So the about good is not vehicle content we

China. customers So important And our our Korean that them Japanese customers, made talked and X very position the XX is of million about, elsewhere X well million are Heath to our in customer. European that as million as with

the XXXX shows of revenue in the in is as position of think, deep So, it that's and EV billion content already global already I we very we shows well as, about EV, really demonstration have how the feel penetration good our $X revenue. our

Shreyas. All please? Can next we right. question, have you, Thank the

with comes question of line Junk Luke next the Baird. from Your

Your line open. is

the places Thanks of question. in and regarding devices. since there's Great. been as piece is, outlook taking very clearly, hit you investment three into changes near-term put that's, think look in I'm past inventory normalization, communications What lot in the XXXX, like wondering forward, center of has of at do you the course, after times data there a Thanks. channel strengthen data opportunities are go side, and system benefited what of for to in frantic the Any for a Terrence, years? seen back course? capacity COVID

Yes.

hey, is, Luke, the always energy it. gaming have be that around and it also service, how there's so were about to COVID, I efficiency a the think, It all could forth it's not also go So, going have really you're think and that but that it's from centers had think the certainly to strengthened, things around has the the that an elements network about COVID infrastructure But I I also core were around one elements about big business we've just there where refresh of used models. data supports their people investment. to cloud of element and into want get

the always there are center we around out, Certainly, So, the speeds efficient. data be will look the how improves make the very in and out come always as for when will chipsets that steps come technology of more data to them in important, center. some

had cycle. years. to XX% element of we've growth have couple will going XX%, the sure to see a I'm continue you're not past refresh You from of the the

efficiency, AI, you about strong think years customers. about the CapEx I talk cloud it, a move think a really to needs of when we very they into we moderation view to the when everything off and of it's a content that by continue two in element the store how data But improve us. that all center So, do for plays compute, cloud the growth

CapEx we're like perspective. Certainly, getting said, side, of on trend XXXX, long very a supply as in the think moderation bit So, channel as from excited we about as we a well little term. the we're chain you that live, starting have

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

the comes question with of Joe next from line Your Giordano Cowen.

Your line is open.

morning. guys. here. for for This Thanks squeezing Tristan is Good Hey, in Joe. me in

anything that can was believe to orders, on industrial wanted down click Just highlight? sequentially I which week? extra double for despite your that, reason Like any you

No.

have call little moderation, bit, bit, As wouldn't the in seen been a industrial talking communications. a little very a we've a I equipment, said like about I use on we off moderation in but the And high word level.

realized It had orders have strong as do and really Our represent, they like our do Industrial more does orders. bit growth. very business also And coming down, sideways, are the orders in little them well. effects a and also in that's moving has you're what Equipment look reflecting actually currency

from see sales Heath and does also an you'll our that talked what also impact to about affect I a have orders. element So sequentially

Tristan. Thank I'd everybody to the morning. thank us Okay. like And this for you, joining call on

If questions, any more Relations have nice please you Investor a you have contact and morning. at Thank TE.

for for will of A.M. November Eastern Investor Xnd, the will Relations website. Time, conference Ladies today. gentlemen, XX:XX at TE That today, the portion beginning be on available and conference replay Connectivity's conclude today's