TE Connectivity (TEL) 25 Jan 232023 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the TE Connectivity First Quarter 2023 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. to of conference Investor like host, to now President Vice Relations, would turn over the our I Sujal Shah. ahead. go Please

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

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

discussion use portion our items. In address and non-GAAP be the certain this addition, tables, on our review of morning of The Investor ask in sections te.com. accompanying our will related can and press found the along to you these of we at release the use that we website the measures with presentation, and Relations press slide the presentation release slide

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

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

Thanks, thank you for today results our quarter second and first our joining for fiscal for cover with our to along us quarter. our everyone outlook Sujal

want of the a to backdrop and call experiencing macro environment. days you Heath in take we're since I a what current all seeing environment on the pieces ago. we're lot discuss our of XX take through the I slides, the do our Before performance the Clearly, to moment details moving within global along with

across the we in markets, to from specific trends we of end continue this markets outperformance benefit While secular is creating to leading serve. cyclicality volatility many

currency quarter. our in deliver we the and delivered two in share earnings our or per in and and macro growth growth weakness that and offset the control. cash we elements us can't We control taking exchange while The we also strategic our the our that execution segments The actions business adjusted generated incremental high team’s communication are organic enabled segments. industrial positioning headwinds segment. model organic can year-over-year free in growth effects, single-digit solutions environment businesses, from we these sales with guidance all flow our And transportation exceeded in to of strong the on portfolio our of

Our the target to margins call. industrial on continues segment that expand through its its in towards teens we'll journey high talk and margin

As we inflation to well to in implement price our continue segment. as increases offset transportation

cost with we implementing segment reductions reduction In are drive the consolidation line now go structural and efforts forward. addition, margins stay additional in of target we ensure to communications continue and we that to footprint in as

So some call other on let provide our XX and since ago. our me days updates markets color additional

unchanged. view of the markets transportation Our end remain

will electric electronification continue flat this global even where an be and to production environment auto content from in Our vehicles position year. outperformance our driven growth in expect leading by we trends to remain

the of our view also industrial end consistent Our markets prior with view. is

continued commercial applications are continued energy in business. in We strong the air our and markets, medical seeing renewable as as well and momentum recovery

our prior the broader incremental as quarters. a typical versus in Last in and that weakness inventory And supply Devices our along last expectation we're moderation will few [ph] and were In we review. across our business the market. our expecting and Device with seeing adjustments in changes inventory where Data demand we're we is enterprise applications the that segments, that telecom fall, and this adjustment Data seeing chain serves is now communication highlighted cloud

were in I stability to XX near backlog supply level and one perspective our we company do from a levels remains chain. our broader in customers highlight as our almost want due from coverage pre-COVID. we book-to-bill orders And is to remain strong the expected increased record to Turning below backlog higher and that than the

price take partially want I these be to and our environment contributions we have later in negotiated on comment inflationary and the which an These inflationary additional and to to just costs environment will with we Lastly, to we've that want do continue the transportation we offset will increases and the through customers expect price stress dynamic. to move increases inflationary XXXX this effect year. margins cost in from positive transportation, as

into on let as me with a Slide we'll highlights start X. So slides and that quick the and overview, now additional discuss get

up saw sales sales in transportation decline We recovery Our market billion in which first offset segment. X% industrial our Communications organically quarter the growth in and outperformance was and $X.X were and the this continued year-over-year. segment,

a impacted segment strong of million a on demand continue Our sales the next details dynamics both on year-over-year X% and up in the and was order $XXX trend Order exchange and trends get headwinds. of reflect environment to currency transportation by reported basis segments, I'll industrial more about into were by approximately slide. backlog

of currency year. exchange prior in our earnings of margins headwinds and tax $X.XX was Adjusted at per at Adjusted share and $X.XX our ahead came as included expected versus XX.X%. guidance operating

million share approximately cash of we'll flow taking free to we buybacks, million $XXX at Our continue advantage was market and dislocations to and $XXX share shareholders, be and price. our strong returned aggressive with

adjusted forward, per be around As we second look be to quarter approximately expecting share are $X.X and $X.XX. sales earnings we billion to

communication sequential Transportation offset represents sequential segments and this and growth a driven will in our in decline the guidance Industrial segment. by sales Our Solutions

teams position customers to centers, name renewable data Our how as focused remained vehicles, and few. secular such around we a electric the TE trends around, just energy we on that with key innovate

moment criteria. that puts environmental, year. This largest Sustainability Jones the policy and Now I Dow XXXX Market named and of recognizes in the was from ESG like S&P the XX% the our term to for long based the TE XXth would move consecutive Broad top pleased positive in social, Index and governance for companies upon away to TE the just Index financials I'm a

to Slide you X. So turn order in trends could would let me get into I appreciate and the markets if

away we're you seeing strength you at key key and prior segment, that is highlight. solutions this transportation, by in the to our and want to $X.X pieces industrial stability look slide in the first are were I versus moving billion I For some that there quarter, weakness in think seen highlight incremental and compare segment year, orders I we've communications. the also orders as the take want

off is, while currency do First impact also orders. sales, they impact

all the we're And record year-on-year. backlog at so we different I And with. currency to higher remains has prior levels. supply challenges rates also compare do levels as comparing than also to chain due broad that order want were year I our normal near highlight, dealing the earlier, stressed to

So let me get the orders by segment.

was essentially and an On organic X% grew served content across industrial transportation them most end our environment backlog strong momentum strong book-to-bill X.XX, In Our production markets year-over-year were stable and our of ongoing in. flat levels. environment. demand in reinforces basis, transportation a book-to-bill is reflects our strong segment, reflecting the of what growth ongoing orders X.XX it

continue and momentum and to improving as We see energy medical commercial those order continuing in applications markets see around to continue also air renewable trends and are to recover.

you on Devices communications, expected to appliance And as Turning thing is other the the weakness I to and incremental we want the I the in market moderating been to orders about. highlight is the that orders and we've talking about. talked reflect Data

below backlog through consistent we've to reduction levels to year to levels, to chain expect what remain which and you continue been with book-to-bill X, and this we move we supply about. continue see As is of talking improvements a

transportation, businesses. can with you of on me strong. segment see through briefly year-over-year and in let those X sales X the that brief are now as out up a on was organically organic So growth the all of that It overview was year-over-year, XX% growth with Slide discuss details each across with orders, Starting quarter results slides. laid

XX% auto in production some roughly was electric our benefits benefiting that electronification prior Our auto by year. the actions. vehicle We're flat versus well outperformance global driven was the leading as from business from vehicles. trends position The versus pricing grew our as in organically

While as auto production we vehicles you XX% the overall hybrid versus this for EV to grow XX in and global vehicles. know, combustion is of the flat to generate production total year, engine electric production auto in expect of expected approximately platforms XXXX. And we fiscal content be

per the content through our vehicle continue to move expand we expect as we year. So to

lag business, we organic that margins in and At Europe. price by declines business, market this partially weak. that's adjusted in the and applications. And growth offset timing in the America was as continued offset was in X% driven grew commercial And organically driven growth, our inflation. North automotive of In by transportation level, to by actions centers growth our the X% the a reflecting saw China driven we were expected, XX.X% by segment growth a operating Transportation

actions and Over months, we the increases price took past additional performance. four to to implementing improve are incremental margin cost three

this the quarter. into sequentially improve high to margins mentioned year as get operating last we to in two adjusted of the teens back expect We quarter and second-half

this year-over-year, increased sales Now let me X% across growth turn to the segment. In segment, with organically businesses. all organic industrial

Our applications. industrial by business was from X% equipment automation driven continued benefits organically, up

organically the Our in by In AD&M benefiting we're energy, sales applications. X% continued growth air the and with and XX% renewable in growth from was business commercial organic with medical improvement saw up And procedures. driven ongoing market. up organically we primarily were interventional X% recovery our momentum

target progress the XXX teens margins on from segment. towards and we perspective, basis see almost a expanded we can points this you for high slide, make by to operating margin adjusted As margin continue our

in in saw this sales And turns, the COVID segment, we appliance organic. would were market as all as with down this as expect, our business. we let The you we turn Now regions to me and expected got is during Communications. across XX% it declines down benefit

lower XX%, Device already declines margins was market the and by which Data distribution business and driven by X% were organically, segment, sales. I higher-margin In including operating Communications driven adjusted broad weakness, Our was in down discussed. volume this

taking segment are performance additional actions in cost go margin this improve as forward. to We we

serving We cloud strong growth will we momentum market. center with next-generation as data to continue balance win in for platform design investments actions the these see

of the into going overview So financials as it with performance over quick me more get expectations on well a he'll details and that turn Heath, as segment, by our to as let forward. our

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

charges as last being note two heavily the footprint You'll million towards improve organization. taken year. have fiscal We restructuring last cost $XXX our charges weighted and optimize year increase the our full year nearly quarters the expect of charges over versus the structure aggressively restructuring as of quarter, now of first half we we that and manufacturing with the more last to we mentioned

further year. expectations the provide updates will to restructuring the We through move we as

we included and rate quarter was acquisition, charges XX% rate to expect importantly, our EPS the cash adjusted to our for restructuring, Adjusted always, and tax for $X.XX XX%. GAAP in the full effective tax approximately EPS below well was The was as for full year. be to tax And quarter $X.XX. expect effective year, the ETR rate and the $X.XX, second we adjusted our adjusted approximately continue And other for stay of and QX.

negatively let's turn year. organic by $X.XX Slide the exchange would headwind now an on exchange expected. In Adjusted Currency to EPS $X.X we the year at million X. to rates up second negatively exchange year-over-year. prior half reported sales be billion number currency rates XX.X% last and We of impact Now expect X% versus $X margins as Sales of quarter, we year adjusted were operating were we sales $X.XX year-over-year. $XXX be full million exchange X% a was approximately indicated basis rates. by EPS And to and $XXX approximately this year-over-year. impacted of expect the up by impact foreign approximately full adjusted current roughly quarter, billion the that and

once flow, returned free cash shareholders we our cash flow demonstrated million, of again over share cash the and million, in buybacks turning to and of was flow free cash model with generation to our Now XXX% we of the through dividends. business $XXX from operations cash $XXX quarter approximately

acquisitions of use return to thirds is strategy our over And flow know, in shareholders time. and that remains our one use disciplined long-term as to and you remain our free capital, to continue for We consistent. third cash of two

us it segments portfolio of EPS turn questions, days with XX exceeded to that me From positioning sales a enabled our provide consistent Transportation adjusted Industrial QX guidance. I perspective, our quick the deliver and ago. recap. market strategic let Before over our and The to a view are

continued We growth Transportation Industrial to from continue growth benefit in and content in segment. market and the recovery

come with end communication this the inventory adjustments However, in weakness was with that. cyclical some markets of offset that and

continue improve We remain we that execute structural increases price and on We the and forward. Industrial implementing that we can to offset reductions performance to to inflation margin the progression on focused our our you can control, actions see journey additional segment. margin cost go driving as in

We cash with model, continue strong demonstrate sheet growth. our that strong support investments generation can to balance for

pressures the our about long-term We with expansion, and opportunities for growth, long-term to customers, drive we very opportunities, have and shareholders. the short-term balance will creation excited value employees I'm and margin

now questions. for open up Let's

Heath. you Thank instructions you, session. for Abby, the give can the please Q&A

Instructions]. [Operator

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

Your is line open.

end my orders into Hey, of you orders, tracked the over order January and more questions. Thank good taking specifically guys. Could provide you how much detail the morning differences any trends course please by and quarter on in linearity market? very for the of

for Mark. Thanks, Sure. the question. Thanks

the stable into quarter for Communications except even trended -- our First and been off, during outside had orders pretty January segment. how

you orders and what's orders for one when are the we it were highlighted. the year-over-year. see backlog and orders is, think or IS interesting area linearity up except about both on that in stable, chart, you So TS our And

We it the and we TS, reflects seen our down see. being that dynamics in have worked backlog demand

really got So look backlog the I both to at and orders to think from a a you picture. together demand, get

you If up currency you effects, if running per apart has XX I segment, said quarter. this million Transportation, on by were around units the it orders remove X% our production as And year-over-year. been call, break

the chain you that growth the content see to stable, opportunity. and proven So that we've, into that outperformance strong comes supply really and has relatively, you it's really, content got think, I And about improved. more our the

In Industrial, that we continue are markets to benefit from some recovering.

Comm back while which dual aisle that levels, very bigger see opportunities content is are pre-COVID improve. to us aircraft, -- to Air, starting You single aisle for back are

years in still and chain And very how would in off medical, recovery The Also it had phrase we continuing growth those just see Industrial, two of our strong that accelerate there but see it. in in because highlight, We and orders we broader multiple talked base, to I probably we business. well. some So as about still we that It going tough our there. see see markets, be equipment very growth I compares. would probably supply to challenges, we're is would we see place plateauing. only a renewables have high industrial I

really always playing the in the moderation appliance would we where we in that got highlighted COVID burn see EMS we benefit it's and Communications, we in was cloud in same, that players to supply happening And as that into we it chain I we in was CAPEX the make and It's you there. here, spend. telecom got. is were is distributors are selling saw applications. the enterprise inventory to face got where solely They had business weakness, and And we experiencing do both weaker expected all say, going We whether communications, out where it, to let's benefit ODMs cycle the expecting what or type it or worse lower-tier EMS. due

of go in So that's have as dealing inventory we're I be cyclical going for us that's with couple think communications. quarters, a pressure it's on cyclical with. the through you us more call, to burns, going with at And I a of a least said element as to

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

Your David line next of question comes Kelley Jefferies. from from the

line Your is open.

thinking the taking discussion. color segment? a you. for quarter? Thank question. Communications how of progression was trajectory sense us my on more could And or you you're and can follow thanks the view XQ the a margin and bit morning you sequential hoping good Hey, about provide the to for Solutions wanted I sales into I comms up segment then demand on throughout give

have that it Thanks excess for down going the to think to I really we quarter, When in on But year, In the Sure, segment, David. showed $XXX where those revenue side. And the quarter. quarter, we probably to as demand see going question we levels, our and repeat we're million ran in what think $XXX we you the every applications. be first in last said around million look much in to the it's question. last million demand about $XXX I'm the in not pretty momentum at of XXX. comm the second

probably So to step what best we expect with of a demand and couple stay now, down incremental can And an patterns for off. where do going work then inventory seeing that's we're right tell, the we in quarters. this we're with

So outperformance that's is works job you But with a higher this do I what done through as from working great cost through teens when this we've as this we base the done think saw proving what year. of mid-teens the its see you segment and as think perspective up the way think the last you'll how back I I about should work we've a the it. margin up margin you'll think I do year. we to think in see work inventory into the you

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

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

Your open. is line

restructuring or much there and is uncertainty Yes, those Terence, cyclicality transport well, confidence of is accomplishing other with in thank you. initiatives? just actions transport also initiatives recovery teens how moving you that and in us Good versus with in around morning. your those taken that color industrial as help predicated margins associated stressed the lot or are these some contractual high on segments margins. to back How a of some you've particularly, in pricing you of can

Wamsi, and question. take I'll is the Heath, this

is targets would focus different margin cost types we all, expect will for a I back how take if consolidation market just But as terms unchanged. in of you our of of those to. each of of efforts, of terms step we in some to footprint are segments you the us the reduction mean and conditions demand First environment, for the unchanged. second, strategically react a

we've Now we've recently seen in more accelerated that some charges and things, that taken. some of you've the

as business those get negotiated different what the effect. bit lag been confident felt that just are three increases, response is increases each the we price a of we But implement real-time as can some are to are to year work decline that we the fiscal expect time, communications in a quicker have and than transportation And it talked versus to the the the when the nice and feel those and about, the segments, price be have they and originally second going by to margins margins those we've to, a a we that little and you teens we're in half -- And of there's our XXXX. for segment story, way from the down in during in meaningful us when we benefit we -- we through break would in continue Transportation real pressures you had inflationary anticipated. the if those high

the Industrial business, with The pleased we're performance.

growth, move continue balance and and both accordingly. restructuring progress through our reflected that that in as see of the results segment. but just we we've see That you forward, appreciate Industrial continue to hopefully QX been been a see expansion, move to margin year-over-year the a teens high the our not for you way us As in quarter, to and trajectory you'll has committed

you well of if the wildcard you types a some Terrence prior Communications $XXX was so at as as back is the over Communications as get we of types were as will business to into the look million that Terrence margins the Obviously, mentioned, go period somewhere and we $XXX here, a north can million for structure, then And And of would seeing. in our $XXX that saw after revenue. and where you years, now. last a plus, levels that we deleveraging million forth impact inventory quarter cost couple the there kick go see of mentioned, the out revenue communications right expect. bit of as being we corrections the will there's in And be range running volume a year the segment,

for not Our that. to but be to one able preserve be quarter long-term XX%, margin to is this still around react able business we're going to in

decline. teens the again, Terrence we focused in forward. say with mentioned all I'll excited as to perspective I that from are we're have platforms this deal importantly, the very areas modeling areas all it, the So But margin in just I'd think that as the a be we about opportunities mention move have that you're and good Communications it, to year the if will segment the we it mid margin and relative we won high

confident there. So are projection we margin in overall the

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

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

line Your is open.

know quarter the half the only quarter, ask March markets impact there the various auto, bit you Thank was the company for QX? year. you. or a the outlook half price an I Is having the last in the going January. about Thank wanted I of for see I but really that for to not you. to agreed to to end back back company into are that start little effect is coming specifically the guiding know that then until said in And into

Thanks, Chris.

on -- about the talk first thanks that. before Chris, sorry me Let part

first the I I about you some your in get we Like before think script question. I price to insights markets the develop. give talk could me said, said think Let around how part I'll that you

We are only guiding for one quarter.

as think about think markets, And a couple transportation, clearly think there's we're important said expect I also to points to still auto we've flat. we production. I think so we highlight, be I in that it's well levels very pre-pandemic key of in production below these while

a XXXX, year million made were -- in the there XX flat cars units that's planet. So XX while and be might around it million versus

revenue of is be our year, vehicles. on up million to vehicles I automotive. and hybrids, units, When in or year, get said there, look well content our that in we've proved if by this on electric about of story going penetration our billion still plug-in it's this XX% to you position, in at in electric around be XX vehicles XX% auto what hybrids -- So will $X electric amount we're of plug-in revenue And And position revenue think and all the about I about there. the about below get our excess excited global that pre-pandemic production. we levels leading

We it, continue in see prove and you to outperformance. it the

Looking negative at our outside transportation, was -- being submarkets. slightly going automotive of that and This last with transportation, on year in is due a for and anything flattish to to market outgrow commercial we'll be going year Europe content offset those by weakness, that probably North momentum. America and China

then you there's potential, dual aisle aircraft, at Comm momentum get growth when only Comm And already expect you're of Air to especially I are going XX% Industrial, continues. growth which that it's see In these further in markets continue And covered markets of up. how catching further medical we're levers Air, also into to we and because are recovering levels. so that and pre-pandemic renewables,

view where of don't the slow, on already energy as well Communications, going think time to related can from about think spent up lot And that maybe a I how we to really market XX% I here revenues as revenue about So that's be. of our to in that's should you and renewables.

our your our part get were we the around we question first automotive, On And it customers. When does the second of stop. lag. in with in inflationary quarter inflation pressures, pricing doesn't pricing,

get through come the year. and the to to the we did calendar They improvement then they second the customers, it will margin of starting in quarter, we in. And continue and the an we quarter, part early do increase our now negotiated, phase transportation first December were additional quarter are We as in in this will quarter, go in which have into round with negotiation from year. and

have we going been start year. those come benefits So of negotiated, to as through work as and they in this the those we're seeing

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

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

Your open. is line

quarter, like talked I headwinds up It thanks, good inventory reduction your levels. within about to wanted Yes, transportation. last own to know just about your were in you I actual margin quarter-on-quarter. inventory Heath, your and some dollars ask inventory looks due morning.

picture? us walk that Thanks. inventory through you could So

Yes. of the And straightforward. it's we today fairly Sure, QX in our activities in fiscal about things anticipation Chinese in anticipation normally talking And what Matt. we're than Thanks New China, specifically honestly, the Year. grow of question. related rather to in inventory for

we of foreign So the half the revaluation quarter, from inventory to that the was just that about planned had within exchange. the if you anticipate. build increase sequentially due other And think the we about was half

are when sit As we'll already. that. do I material as year, you think going other that what look to you to about -- it communications we'll the for plan talked well a the anticipate I segments Obviously, year, for end have with aggressive. to and then the not and at need do be do the inventory about we when -- at two continue at of the on And on -- we back inflation. look this side we deal everything we're has Terence

hopefully, question. So your that answers

the please. next Can question Matt. have you Thank we

of next Jim Your Suva question comes line the from from Citi.

is Your open. line

Thank you.

and content transportation is compelling. very story Your positive

is a the One concern, economy you progress unit recession and given any So get correction but there flat mentioned though we outlook, is as slowdown through or a potential a signs inventory a XXXX? we congratulations that. auto slowdown on concern there there of or

is mid-XX below is our Jim inventory, is customers which consumer. North No. is China America in we well how's question. still in the Jim, days, to with line pretty line. which XX and at days, the that more when we inventory continually for the And traditional. look And Europe is is monitor really what in the Thanks much

that improving chain continue monitor out the we supply What's see the also chain off. continue in to to that. there So be being is you that worked the anything would nice across world supply

we So you, watch I'll with to be honest got it.

macro but auto again is production slowing So do pre-pandemic. XX% still we're I economy, stress below also to in certainly, a want

planning I I way we're but think we've a the it. don't now. an it on way flat So been seeing think we've overshot, our is I have business right keep prudent And to is think we eye that

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

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

Your line is open.

of on have the expect just my increases on side, that [indiscernible] year? expecting more bit taking that I on for then the their can I end love are perspective were point question. transportation I'd into lowering your do guide own I raise flow really Thanks to up this embedding next if on can for fear sizable time and customers, of kind likely pushback, think a how in what these size you see your the you benefit at would OEMs you're will this price what the the your actually is, XXXX, not you secondly, of with guess, car into that the or price for year? you model quantify XX% through the And flows sort you have auto for increases from spent prices you increases XXXX? that more XX%, a price that are So confidence by just this size

Yes.

of So a things, couple Amit.

your I every element bit, breaking up of so hope were a question. get You I little

pricing our off, our are First customers being with contractual.

round, and transportation. confidence you've aren't These make the and been, three want do that checked. over pricing than four us give lag a around to we which sure no that are So have is negotiated the another those does elements doing global the to came seen months in, different past agreements I in around have us transportation.

in. they little certainly, one Now be different, coming bit is a will and each

and will we that year. will as this them see the through benefit quarter go of it accelerate the we in, we're So starting

dealing the with other And is still inflation. element we're

conversion oil-based, a And you we at than still that use. might though an transportation last of when inflationary in inflationary So out that an environment, are We're we come of the be that are and these even lower how still come as in things materials rate period, some still look costs we're dealing with utilities in. it prices it, year. in

will are I our the the -- expect that in do the environment said message, to in from on pricing get the and flat in margin commodity we as we high teens we that customers, put So year, with a do in up our later we what benefit prerecorded our business. and

EV their launches. to key We are

making the commodity products here. do And what aren't them. nature contractual We with we that's of

had have negotiations, price we So have we confidence price them. certainly, may go to around that's what do pressure. the some through and had pressure, we've Certainly, they and

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

Melius. comes Your from line the Scott Davis of next question from

Your line is open.

morning guys. good Okay,

Scott. Hey

seeing you harder talk There's -- inflation little I and is price already the But for track? materials in follow moderation think labor material I and bit to can understand a can that disaggregate we labor ourselves, and help but inflation. bit like kind of of mean inventories been are kind things is you us lot something of inflation, a on little a us

let's say more it, those you of would I use inflation really neutral is of chemicals, there. from around year-over-year. inflation in. energy cost materials material, and would things come and around actually would but area through and Utilities In Yes, you we is also those have some other make think face Labor seeing logistics the metals when a Europe, use. that to bigger of conversion come spend And it's we is run during that we that say it. Scott, base I higher, utilities move where the important you the look things our then say off, cover is inflationary. you when it's the our still And around in to look resin-based I I period, it planet incrementally biggest only you certainly, costs where to you have continuing world, do well, And out that but come perspective. see this a really base factories how we're that around lot has not retreated and about talked have through you the have the freight do pressure the world, of where part material is the

last So you everything inflationary. year, have would had

You're down. come seeing logistics freight

you're biggest be we energy-intensive oil-based metals seeing and headwind it's an us neutral, resins around You're for things for more still the I have, still that have and companies. be but inflation incrementally Labor other inflationary, wouldn't are seeing may it. but different say that is

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

question from Oppenheimer. Christopher of Your from line the comes next Glynn

Your line is open.

Good thanks. Hey, morning.

a sales on second incrementals lower the held few Just you percentage the Industrial margins, hundred was shifting points. curious were I half little margins year. versus about And last of gears segment a bit.

of structure about hitting culmination you've cost been you're for So a while? curious a more the if I'm talking of program that

on good with and Heath. I journey results year there's our would we're certainly, like it's Industrial. being Chris, pleased quarter. say we progress a always It's question. the It made. internal as feels Hey through we're certainly, viewpoint, And with that, this in the the look

-- have of do last segment enough to just right? value and the that's there's thing, couple journey, of least overall. lower We know we then tend those We other -- acquisitive where in last the we margin. good does we the basis we most bring is in. the reasons, this get done start cost appropriate, to a that feel, We it's but part see the But the margin and from at acquisitions from we as returns this points pressure We integrate structure in. the creation are be And -- lot years, Now of something acquisitions. XXX of right.

So feel from absent last that about are -- journey really the journey good impact, I'm been a pretty been restructuring we've flip that consolidation talking publicly which for is rooftop a I the five where we top sorry, years. or on, we've very about

And a just made relative opportunity. have the are progress pressure the that those to in things the ton on the kind We rooftop the of terms consolidations. of acquisitions here in of are wildcard then

much, highlight that I pertinent into I'd as Chris. question. but get don't we it that, to was your thought Sometimes,

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

next question the Your Stein Truist. from line William comes from of

open. line is Your

question. Great. Thanks for my taking

little but into more answered like I'd a M&A of the a to just opportunity. this, bit dig bit You

its third to over on You the plans highlighted of that company acquisitions. about free time flow cash a spend

level been I several below years. significantly think it's that for

both you spend that expect refresh number? free that So couple bit quite the in been, cash whether of third next memories to accelerate I'm maybe has our flow might a years hoping to as approach given of think, can the strategic below M&A the and I to tactical we and Thank you.

the I and two we is that about thirds, right. through one have cycle, appreciate the for question. talked talked ratio years third a about And certainly,

or of of tends been size a heavier deal years I time, direction. in have tell you not have particular you swing of going do same You're At not we're over the would to active it's a to spent periods third. and where times that in that acquisitions when the there's the mean couple you last we time space. that doesn't

far I million this we've about spent fiscal think, transaction. on so $XXX a year,

in or know I at quarter-by-quarter one-year in we're off what but of that even terms really you can't a ratio, in is -- our look it So don't basis.

we on well. We processes of a do stuff monitor as that cultivate pipeline And of lot you own, of we imagine, out track have as we in obviously activity. that and keep are involved are a our there besides the and

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very to in about. to make that going that spaces process. to acquisitions disciplined So we continue good smart sure be feel in going we're to and we're We're making that continue

aggressive business just of where there, continue some there adds it is track be And on in we our areas, which as all depends over we'll here fragmentation those units. see to out it we'll and it up So and time.

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

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

Your line is open.

Joe. year, Michael the on in restructuring earlier, little with the mentioned would levels. are line half a additional costs morning. elevated any first Good mentioned This had super helpful? I which behind you you but of that, for disaggregate Can XXXX be the bit more drivers you Earlier, know color is in

appreciate the I Michael, And Yes. question.

we And FY from plan our particularly will that segment. into FY sorry, restructuring Certainly, the the roughly incremental XXXX As year, prior down in XXXX was you think about downturn, flat the year. going around prior be million. it, -- around with year when said number was I'm or number year, the we into Communications XXX went was the

after number point much exactly is. to we're I'm order elected that already But FY right market online And have million really how would the to we quantify to not a hope that it's accelerate that, not We view XXXX. north things happen. have that and a to QX $XXX react get good react a that, in was want our this things which going certainly, now took to more number down. that some spent of bringing that's push higher I to chunk aggressively we at charge of to Longer-term, I we would here back was we've where say of will it in that, aggressively some with do few after higher. in But -- a in XXXX of when We'll to a better anticipate conditions, here. April. our

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

the Your next Samik Chatterjee Morgan. question of from line comes from J.P.

is open. line Your

dig if to the industrial segment color thanks bit my sub I there. equipment into wanted Hi, and for a guess more I some taking I see get question. can

macro, seeing of you broader how I when the equipment, you're in -- But that the the sort sort of about terms what You any look in renewables. the what takes talked are puts seeing the industrial Comm at group that in there, book-to-bill, of at? is segment on recovery and color of sub medical, are are there, and tracking you what Air strength sort and the of also impact industrial

Yes.

So the first keep you at XX% years. when I you, look think we industrial of do off, to would tell the it, each grew have I equipment last our business context two in

types is what see around growth. backlog So of around seeing things, very to that it's around the we're whether CAPEX I vehicle, what see backlog you strong we And very automotive, electric strong. continue think those is

improving. chain supply seeing also are We

So in seeing chain space, improving. that you're supply

a but not will to that order impact Communications. levels the seeing extent bit, So little we're in

lost is, us, what's that not thing we're electronics. it's on think I other watching in consumer happening The

factory of a well. be warehousing automation. weaker that user environment And certainly big a a has as is What could around electronics been happens Consumer market. weakened

areas when seeing when that, about there So think into. that go are you automation. but And products in are at as we areas, there well the look our you're infrastructure strength process also investment strength

not direction. in one you, all So I would tell it's

would up that supply And compares orders tough it see well we've chain we have like to feels -- peak I be the and is going an how it also a as plateauing we're it's as think from seen both against. improves. we going

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

from comes Steve Fox the from question next line of Your Fox.

Your line is open.

morning. good Hi,

Just you here? then lot et just of as questions especially of your road how your Can manufacturing a cetera. policies, even do should look the there's China given footprint and shorter at global all down or in sum in government flow there restructuring how current terms of around some China Thanks. one of you of situation look out news sort footprint, broad term you question up long-term been and companies the changes on and the for sort

how things, Sure. can? mean quite some very Thanks, we couple we And make footprint time if of China always I you Steve. a on been we that engineer and for do And now, produce is much followed us our we've for where China.

want where in do that, option. have Korean or out they continue plus where are have an China, we exporter for Japanese big we even some be might customers one We China, doing do look of a do anywhere within China not and region things at we to may we

view a than and as change import wholesale modification things a back places much I a lot because we more to of it the States. don't like an So evolution United

talk we We're market. when a vehicles. about is electric opportunity, also growth -- China the largest our vehicle you through think electric lot

to we look to vehicles. to share of up continue those OEMs as continue how make they capacity in local we support lion's China at expand So do the electric

to to we the what we see chains supply to net-net, going are, the supply is, more localized into manufacture picture China. our our so restructuring strategy chain. the within to Heath region. back make in out we in we're Certainly, in things again And customer of of want So to continue and still you're it's make exporting big to like some about region, to in the cases, us even mirror talked we're places sure have move best want some China. that for We modify Europe

be that to growth. around these long and key our continuing drive to China there we in we're verticals So invest expect term

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

from of line Guy comes next question from Hardwick the Credit Your Suisse.

Your line is open.

Hi, good morning.

transportation a if bit margins want understand, covered sorry but I that to this already, just understand has want been little Just to better. the

inventory you to, as strong XXX you're margin mix. by driven guided the XXX time, if last you points at I on still this benefited margins the for same like quarter reduction. from, of think I the least I basis in the of in Transportation the also impact XXX pricing. at impact, the well outgrowth quarter, believe, despite pricing basis At decline points very as take reduction XXX So And strong that points even out to basis inventory

stronger understand the So get that communicating, year help as you me little can that even progresses, does the a you're pricing what better? is kind of

little Guy, covered Sure. some go We Heath. it and we you think bit price sit a largely is really calendar-focused, of here a this effect about into little more earlier, this today. if our but increases as are

see all our aligned obviously in but the pricing. time not otherwise So or they're frame, or transportation on same in results first quarter from much January-ish didn't we less, help more date,

well that. out you it thought have laid would in pretty of So as terms

back well as of -- fiscal those expect you'll as see quarter the do I'm both second significant well And our the that those year, second our in earlier, Terrence from Now way today second help as our through of the confident sitting pricing mentioned see results in and work we we half year. both as a year, we're as half both quarter you'll in the quarter increases. in those the our the quarter as

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

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

Your is open. line

if A and if my FX translates works to guidance, the back moving changed can impact you the it the has terms the Heath, understand morning, what pieces us line impact taking for XX as wondering modeling of ago the plumbing, how earnings days top specifically, from thinking starts versus how to in of for through half me. thanks question your year the about moderate? help question. especially Good that will, updated you revenue wondering earnings, just around

a us in we XX is are impacting we little who where transactional impact. well things the did starts move and denominate we to of The piece versus And top translation companies listen, things dollar end and global. across obviously, into in as quarter. is we a that the The piece weaken the of quarter, see across Sure, line border, for line relative getting dollar. towards of impact costs that's because we things all moving it's terms currencies. really a where harder days. most the been sand snap Luke. bit those And currency just over That's the are types the the have where And where particularly past the in

more And EPS element of piece of that the impact so of to has an it it.

weighted. quarter billion and and last -- that in talked year-over-year most $X we billion, Now $X of most of half that the first first about

in it's year-over-year still million the at half that about of and the first elements that. bridges, of numbers terms largely rates, we talked of the second half today's quarter $XXX first impact you And think million in just about, the in of EPS that, guided provided that's we that I $XXX see in the we and the for Now and year. the quarter the

the of Now today's back you itself rates, through your it the out. if way balances year, half work at

much swings quarter, year. and around point. have into bit of fourth numbers little of impact in I A tailwind in a the headwind the of bit we're of a the that getting don't the half in it You smaller back quarter, at think little much but an third

there. what's how half, That's So we at don't today's to back kind of it again, going the go rates, know looks. from

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

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

is open. Your line

so Hey, for thanks much taking question. my

communications. to back coming Just

So maybe little bit year. this beyond a thinking

Obviously, the XXs the about that that next in trying versus ability talked be of for the below internal taking to mean to get much dipping segment. back actions that level, end on margins You've to a the the that markets of to sense low out? of but some just quarters, XX% going I'm sustain is bridge you're that few cost how about I get to low dependent really talking we're

had small your models, it's first I little our to segment, smallest getting mean, take Heath. So This I'll at and Sure. always knew And kind was start in a real two rates. you look relative law high the for right? this. all, you that about the years and what when think jumping have bit on flip output when margins down careful margin we you the see up you when of of It's TE factories -- last around. there's very are listen, a of if the I it numbers because is here basis of really when we to leverage we not those

rate And million the at part inventory that does few So impact. sub know the of XXX XXX quarters, here next we channel of is amount it quarter when you it just also of in to to from million reality a off. the per this. go that the segment bleed think nature a inventory margins for And I run down have meaningful that's million of exist the that cyclical XXX

than that, been the of and XXXX XX% to to -- back get of able to specked fact as the closer to at through next us Now growth years. see this that the a know really for in our forward the confidence, for what of several least in that platforms rest number terms margin a here segment, don't we that bit good look the resides couple the of but we being things see know going capital know we've in going segment billion the or is $X for the incremental are. where We needs more going we a of air pocket do [ph] XXXX. like, We on are to margin to about We right. grow. We feel they annually, for next the continuing we're our markets customers' and quarters an and are where this

our you you. Thank thank We'd day. additional everybody questions, morning. call please you for have Relations and to Investor Thank a do nice TE. this joining Okay. have like And if contact at

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