TE Connectivity (TEL) 26 Apr 232023 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the TE Connectivity Second 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.

I would now like to turn the conference over to our host, Vice President of Investor Relations, Sujal Shah. ahead. go Please

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

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

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

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

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

joining along cover what Through the discuss I the along a for quarter. do to third Thanks, second for I our slides, backdrop with our today quarter a our the this us dynamic appreciate versus of last details Sujal. we’re fiscal our what want quarter days take market within performance our ago. seeing to moment environment results our outlook And with everyone XX to on remains call

in well markets space. the and At the in to with trends, renewable impacts global operate and the wins end intelligence so momentum in electric [Technical adoption, around and interventional as foreign as time, strategic portfolio of Difficulty] procedures continue key currency growth secular include We in world and same medical our energy a adoption, from certain positioning exchange inflation. growth artificial vehicle these cyclicality

sales ahead our per enabling and well. offset guidance that to was above that delivered Difficulty] [Technical we are impacts of X% share these guidance adjusted from the earnings from growth trends organic was Growth us our as

on reduction remain our margins journey through and of expand cost a actions. to combination increases We growth, price

discussed drive margin improvement year. first enter back our as As of plan we in quarter, next we the from beginning year this the was to

We in are the in segment expansion sequential Transportation second quarter and the our this company guidance. you see in plan in sequential progression our executing level margin to margin the the third that’s implied at quarter this and

our an important continued strong model that know our our along is supply of XX% With with and enabled helped to owners. down capital performance, all the business free reduction strong improvement generation. team’s half You cash driving flow in of strong us inventory our back inventory part chain to drive [Technical and over to cash levels Difficulty] operational first to return year-over-year

with it So updates and Difficulty] experiencing, let me driving provide color seeing [Technical we’re macro on uneven we’re other across impacts is environment that now markets some the our portfolio.

markets that some growing, some and remaining are that are have that We are stable cycling. very some

our our business through Transportation this truly segments we grew of Communication while Difficulty], and And declined. evident go [Technical our Industrial in in results quarter is the all today where second both businesses the segment as

year. remained at flat the we remain to per through quarter approximately production our XX prior view units continue transportation as consistent expect second markets auto we view the of Our and and roughly of half with million to our move

and outperformance will driven electric Our [Technical continue growth our be vehicles. lead to Difficulty] by content

quarter, we and you spoke when of last this. strong sales all businesses to segment, Industrial were second results reflect our quarter In our our

our in out three strength continue of to see four We businesses.

recover. business air continues commercial Our to

Our Difficulty] medical renewable quarterly had business [Technical and sales momentum in our record energy business applications.

the $XXX corrections market talked across and quarter, supply about in to $XXX due to at million inventory weak customers. this end couple remain our get weakness quarterly the revenue by of be of off quarters lower we sales we will to Difficulty] range a range worked and being chain. [Technical million orders and we is segment, the now Communications customers’ our our In next for believe both Last

want will I it’s I we remained content to well and we secular the highlight creation increased levers, disciplined expansion TE. around year as Difficulty] before into through value and do is of have flow that the [Technical markets as about as on Strong where way free and finally, move long-term cash And positioned generation, think this growth unchanged. a we built pillars get margin slides, which longer-term. enable It the

X. overview, Slide So highlights that a quick additional get as discuss and slides with me that are let the on into

sales were the by segment and saw head of Transportation XX% these organic the and in segment XX% $X.X the our segments. Our Industrial billion the growth second all of [Technical Difficulty] we driven was Solutions in organic it in with in two businesses in quarter guidance growth

[Technical orders our our Difficulty] segment the our trend with I In and exchange the line headwinds. next up $X slide. the order basis, In Communication were quarter, segment, On talk sequentially grew to was billion expectations. and by X% year-over-year dynamics in decline on will a approximately about sales included XX% more reported

expect our XX%. per free $X.XX year. the for back earnings the approximately being exchange to strong returned year $XXX operating in came we the $X.XX guidance owners. year. $XXX cash currency with cash versus was Adjusted margins half strong half strong cash tax and share second included million Free Adjusted do a of prior flow first at conversion of at was And with at and headwinds ahead of along this generation million continued the very our nearly in flow

$X around earnings sales We to adjusted to $X.XX. approximately are and billion be third our per share quarter expecting fiscal be

from earnings a in represents flat second to quarter. share, third decline which expansion per the sales, sequential a implies guidance margin Our

margin be Transportation to half,largely in first confident from our the by We as we continue expansion segment. move driven

this the product among is quality received investment Difficulty] recognition, that has a for pleased Admired World’s named year a were value financials measures consecutive of that And a responsibility. and which just the including away [Technical Most we Companies. second, company’s moving TE number from we Fortune’s are This sixth criteria

So seeing our The we’re the improve in well let’s well Slide chain order X orders about supply growth to as markets. reflects to to as let’s of talk move orders trends about increased billion $X as ability our team’s and levels service our the talk the what and to we’ll in stability as sequential customers.

I key Industrial in continuing weakness think the [Technical in in that and strength Communications. is to stability the see continued we’re Difficulty] overall Transportation, market

in the segment, orders business stability Looking as energy Difficulty] to we we well XX% saw air and as applications in our at Transportation orders continued renewable where mentioned. trends recovery. with our around the [Technical sequentially I Industrial our this momentum In business, and by medical reinforces sequential segment, grew continue businesses commercial improving see

in now last One seen that we’ve talked as of certain expected quarters about that patent change few since market. segment, continued industrial we’ve the is equipment In reflect are markets. end a weakness in and a indicating for that moderation as orders moderation order the devices quarter appliances data well the

overview all sales these get So with with that through let’s results slides. Slides around growth with strong brief across segment businesses. are each X details can organically on the Transportation, year-over-year year-on-year Starting that up growth XX% X on was of highlighted into see you orders, organic the and

electric the up Our auto Difficulty] outperformance vehicle by production vehicles, was trends that from driven versus pricing. business digits versus [Technical position the grew year. electronification low-single our was prior The organically in in auto XX% leading

of the price lagging margin we’ve us we but discussed, increases, As help go we were expansion previously in which pressures, we enable recovery inflationary as forward. implemented

electric know, hybrid continue as overall and in Xx year, expect you to to fiscal platforms remain production we ICE is generate While to production we auto expected approximately be content flat vehicles And EV of versus [Technical and Difficulty] this for to vehicles. XXXX.

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

electric organic market. leading Europe, we vehicles partially X% saw North by growth commercial about offset by in position and excited China. for transportation, commercial transportation global our We driven In declines remain America at

We with significant and design wins all progress at truck, the specialty key bus continue OEMs. make vehicle to

connectivity X,XXX We they the a volts challenges the to providing EV customers application. environment battery broad solve of that’s increasing harsh our throughout the the space. in heavy expected range truck These vehicle, high and enabling which are are voltage withstanding products, Difficulty] [Technical charging fundamental a that face speed of in

we design expected. which automotive volumes see driven Sensors increased our was applications we XX.X% by to wins. had growth, [Technical new Difficulty] business, as X% were organic Turning adjusted from as our margins operating

versus price of in the dynamics to margin, an XX progress caused the year-over-year mentioned. saw we sequential point inflation the that I While impacts quarter improvement basis reflecting

quarter second half to third adjusted margins of teens in to Transportation segment into the the the get again improve in the year. sequentially expect the We high in operating back

with Now the increased organic Industrial organically all businesses. sales XX% growth moving year-over-year segment, to across

levels medical interventional medical be record at it now’s sales in to COVID, growth. back business it’s again. and growth Medical The following market about organic a in Our had nice $XXX and was to was up pre-pandemic a but XX% million depressed quarter talking

In we by growth our entirely applications. this to is renewable growth driven the and business, energy with momentum XX% see continue organic

for We scale and applications continue has around and enable and and helping growth solar market we’re to both TE and wind deployments addressable double-digit drive wind solar the renewable world. from a applications the CAGR farm utility

nearly reduce these it’s applications. through high it’s our and our you the about a revenue. not mentioned playing renewable portfolio, when kilowatts, renewable to we these of represent we talk like strong now customers of our knowledge kilowatts, bit very our applications, that important energy, cost. our gear can application switch little about are broad we high the the provide get XX% higher are installation out to you are you the these voltage in applications. see business, important products renewable enable to on When And And we in total helping car. and voltage and and we maintenance wattages these growth energy talk product into give And just going in through very perspective, in And connectivity the bring – volts positioning

marine, improvement Americas in were our in defense, China. the X% XX% aerospace, growth And were up finally, our to business, ongoing in equipment industrial by our with the organically sales commercial and the offset and market. partially in with sales up air Europe, organically Turning weakness

segment margins business impact at impact as came divestitures. mix in the and an operating this acquisitions for well from from XX.X% Adjusted the and reflects as

expand target for to and teens continue sequentially our into expect quarter to third We the high margins industrial segment. margin

expected as down to down and regions. provided range the as and last down earlier. margins adjusted supply were $XXX sales weakness The at Now operating devices, as digestion we segment, declined were XX.X% million our data to $XXX market XX% as the let market turn were million and expected. inventory discussed appliance all to In within I Communications expected me we we across due quarter. chain but organically, where is Communications

the to we lower earlier, of closer end be think volume to quarterly segment to $XXX mentioned the we at the and to low be of maintain sales we I million range going for operating the margins And think As will there expect able next gave do we this mid-teens. it’s the couple in at quarters. be adjusted and

do momentum and D&D win As to I we market. the highlight center next look cloud serving generation want that beyond have the business data continues near-term, design that’s our strong to platforms

When low I’m you it engaged leading ecosystem latency cloud and we’re processing need architectures interconnect. that the providers, with the as as companies. drives intelligence, including into and key get semiconductor rising performance complexity artificial pleased that high well both

over server in expect to AI billion in and fiscal programs $X design of XXXX. We generated up have new wins new ramping and begin applications already

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

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

a taken have of other quarter and the continue a expect acquisition organization. EPS $X.XX charges charges $XXX million would the and to footprint EPS million improve structure the GAAP was $XXX approximately charges be cost as restructuring $X.XX. restructuring full to for and optimize year we Year-to-date, manufacturing $X.XX included was Adjusted and of we and restructuring of now our

adjusted tax QX. in was The effective rate XX% approximately

effective tax For third adjusted quarter be our to and the the full approximately XX%. we for year, rate now expect

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

Currency exchange $X.X let’s X% and on organic impacted $X.XX nearly of reported and sales adjusted up turn billion X. Slide an were versus EPS And year-over-year. negatively by Sales the million $XXX X% prior up basis year. to rates by

our both expect have We year-over-year again negative FX on and in basis. EPS a modest impact to third a for quarter sales

the adjusted in combined a XX% were our in margins second year-over-year from basis volumes margins quarter, with points of result Communications operating price headwind operating saw our Adjusted impacts we XXX lower as and currency rates. of about to the perspectives, exchange segment

forward, expansion. margin about it’s note we go we and second are remain higher volumes the that we on to drive margin dependent important As not confident expansion in to half

implemented our in our successfully move will the pricing have Transportation actions of fiscal We offset segment year. as drive margin at we second half this level the company impacts and to inflationary expansion through

will expect also We second a modestly here. Terrence at Communications story It’s that QX should half industrial good that in levels the the in levels. mentioned. margins expand remain from the expected volume mid-teens

year, Through million, business fiscal first $XXX model share cash Free In $XXX the $XXX million cash shareholders buybacks dividends. XX% cash our quarter, free was with was for $XXX the from quarter million. we [indiscernible] million. year-over-year of flow up and generation of the was our half cash of once through our operations again flow demonstrated approximately roughly

few ago, free supply cash reduced contributed drive inventory inventory you may look I And levels flow earlier, this as in performance. indicated our our which mentioned chain. we improving As quarter, Terrence again recall see a quarters performance our to would past as that we we to lower

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

the available our ease to markets. as to remains our and want strong profile, credit robust evidenced very I by that capital access stress structure capital of ample liquidity

and consistent sheet business of a strong Excuse our [Technical financial balance policy a me. maintaining parts are Difficulty] We model.

segments over trends market from Transportation despite turn us let results end a cyclical strategic enabling to the expected. in XX ongoing The with I provide quick markets. recap. Communications secular as weakness ago we our perspective, with questions, cyclicality Before of Industrial consistent portfolio our deliver me a From is certain and our positioning strong in growth segment days are to

half second margin driving Our rate higher to margins, expand focus we cash in fiscal free generate and flow the XXXX. is a operating continue strong our adjusted as to to enter

continue We remain to a stakeholders. And for can investments us the for demonstrate with model expansion strong ahead sheet margin about strong our cash long-term growth. drive and that excited support to we balance all opportunities value generation creation growth, our of of

it open questions. for up With that, let’s

Q&A please instructions get for Thank Chris, you, you Heath. can the the session?

is Goldman first Certainly. from question [Operator with Instructions] The Mark Delaney Sachs.

is line open. Your

you morning. Thanks comment taking for on… Good question. more detail Could Yes. the

Hey, Mark.

by you expectations topic cross the morning. end on in drivers? detail Good Could more then how comment and content OEMs. your and currents in being you on vehicle year could and market of then with China domestic per multinational TE’s cyclical various impacted for the if and maybe the your on that’s content elaborate the please content, between particular And balance OEMs content auto compares the how China of and share

Mark. thanks, Yes, right. All

some repetitive of of of of but I’ll with markets think and what seeing Clearly, in in it a first bit very seeing orders start as various there me will color. are see I Let this little with is that, add of industrial what we’re be we space the the part which is is markets, what the continues – the strong. and well we as most to unevenness be

inventory stability you and markets weakness. in have where have you have transportation market it’s do correction, You communication

framing the of those keep I in think it have you to buckets. So big

transportation, in million sort now think in automotive transportation well units. and is row around click is I for units been the still XX million if XXXX you minus down three have or of a XX below think still an I been and plus we’ve years about – back

content over of automotive over The while about also $X.X production’s the [Technical off and built that that. see is the and we can So It every same And things something the this And or of production side. been about we period of our XX% of it’s shows, is majority on down. is, billion is the the billion about be excess do talk about But chunk in through it out up trends vehicles. staying quarter. Difficulty] see vast you time our it’s comes and automotive continue production also year we’re growth. to And one so still up even I proves content electric we’re to proud expect also And that’s comes of think flat going revenue and will business we’re we of vehicles. with where it as the electric $X it we’ve from content. that said, the business position

on into our and the do we thing have content that is Now year this benefit we inflation. put the the from offset growth pricing one

I the we our dynamics. XXX normally quarter will basis really the But guidance margin do implied about said be that’s quarter points would this more where leaving on feel reflects next and growth versus we have. those with up guide So in

markets and industrial about – I industrial plateauing more the last into we’ve remember businesses, in market. equipment some market think seen weakness like orders we certain industrial you that talked areas some a have the bit in get when areas three equipment strong still and in remain in showed little quarter, our our we

You’re see strong going to in growth our due renewable to energy continue applications. business to

on growth high this since you and turn XX%, high If around position it’s but business. renewable we TE – take what grew to we’ve digit really XXXX, CAGR energy quarter, done it’s a single into basis a growth and over

position And also as corrected can procedures Medical, single air, digits. that chain really interventional mode. it’s still the get we’re the again see back and record in think supply higher be something in that that’s I you com nice – revenue. growth we then that’s and where ourselves I think we there recovery

not is back. [indiscernible] still Our below levels, revenue is pre-COVID

entire chains and still get I as think So the there there’s supply better. recovers that space upside

have what’s supply throughout are us quarters. documented, communications it any we And we with in is, cloud think of there that’s the manufacturers spending be well and couple at be that inventory, as the chain do corrections going ODMs, really the across there next everything happening OEM, the then whether pause least of contract the well And distributors. as to

does wins the I where get the of like going call, highest on we’re on off said where very that that that does speed the inventory to next get and artificial the Once design are we’re teams are with our as forward. back move interconnects worked generation we really good cloud, But comes which there. required on that there feel intelligence positioned getting

moving about content we’ve think during clearly through coming through but you is where has that talked So cycle pieces, I been. to this do some and come we’ve

Now your let remember China, And the comes out it’s GDP as first up is choppy. China report second Clearly, me question. think recovery, we turn its I just all have printed was to of and that thing been it X.X%. to

we TE the look the only Communications very not in what things segment, China globally. For China see is the to in in but overall segment similar

weak. looking we segment industrial some are side, automotive When the and markets see last grew A And and those our you supply in we’re quarter. of the transportation weak positive segment, does bigger expect our then Industrial lot in that remains momentum. to equipment year-over-year So that is to grow if correction. look get quarter, China around we this our play chain at Industrial

think important we see globally. is have the So grower when the growth electric of we China vehicles continue momentum the about is to it, what’s And you think there. from I

see You growth. our in that

something look in be growth four at and have local we whether get part the it’s it’s or multinational very whether worked And very going even, six. to world, content elsewhere share a drives in something our as even of our you shares to a or to hard adopted, make when it’s sure it’s that China teams have EVs get. it’s We or

And TE content related see don’t our to in we for change. OEM any momentum to we’re So is what’s any agnostic OEM. always important change

for We’re sure the vehicles do trying of win the and has to to consumer. adoption scale to out further auto that what we make industry electric

Okay. Thank you, Mark.

next the please. have We question,

Snyder Chris UBS. with from is question next The

line open. is Your

Thank you.

up the was in organically XX% business auto the the of first So half year.

just year? the price, production, company the half prior this Thank the that or this the The Xx increases recent expect in out first is double-digit about targeted the are of the roughly we basis price believe throughout How of flat I called trend half the than So outgrowth levels. XXX versus points Is back should about you response, year. you. year? for as implemented auto back stronger half the into

do is, into any for to looking be I basis there. price be first you – careful question. what period quarter going think the as comment to in. chain in thanks get time, going you’re the as supply XXX And we say price, probably get elements is around continue at benefit points No, as to I’m going you because to thank do your think please in I of and or content short do rolls

above drive at year. four continue that for that, part talk will Price be we a will we that about. six And this year, to us take range of look the when normally the to

other think a I I the it’ll said. thing, little be and just what I redundant probably bit know

that to continue expect We global to vehicle’s of XX% electric going be production.

to see think do you’re going to continue I that up be very good. set So

overall per over important time and I think look how content is to it most at. factor trends the And vehicle

it’s ago in that due content So we proves a levels to our about today, low-XXs, these in to continue and lot were just up. on and service this improve years few chains as the supply vehicle as in electric the back a low-XXs go we we’re XXXX, talked calls well

content going have growth. but impacts You’re quarter times, of into about some very at on we’re to these where net-net positioned good feel

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

question of Mohan America. with is next The from Wamsi Bank

line Your is open.

basis trajectory detrimental margins morning. in Yes, bit was color of to drove through turned where QX, and course I and made year? year-on-year Thank how about What think margins margin overall than you the on margin should Good the get thank some transport, was lower. that progress in the a higher we the but you. hoping Also normal. a much this on industrials incremental you. conversion

single the you Hey one. TE But we margins ago, look I at significant I’ll Communications is segment. Listen, remember, a framed Wamsi, the is pretty the the decline year we on in margins Heath. basis think up have Communications overheated bit year-over-year back segment you impact of the a go as if to this this a biggest take kind and at run of were goes brought that get how $XXX volume much have get getting. to million it we volumes And is roughly quickly. back reality million pretty those from of kind to to of could quarterly rate between $XXX million, leverage business a you million showed types that And $XXX you $XXX a and you deleveraging steep. down

So we expected some expand cost that this, or knowing revenue higher, would didn’t down we were structure was it certainly cycle our point. our when anything at

say you then quarter, over basis third of and Net-net points going of which you quarter is the June going that company margins, want if look to impact. impacts whether look year-over-year those same And to the have year, margins. And both, quite impact that are our you at if that’s now, and we’re guiding similar that from and kind you to back impact. add to go impact we’re last to year-over-year at our the have of that FX, honestly, in together XXX

here, in you like if We’re going broader running where can But does that beyond implied we take see. range of minus, kind that’ll revenue, $X guiding gave, quarter plus I’m let’s of we’re So just in as this right? billion forward assume the be of and just in picture but range. it that not or guidance look that’s a kind say, our you from

billion billion quarters. $XXX our back So to $X.X running billion, quarterly fiscal this the of for in Transportation and $X.X half as then the billion year, is $X.X be going to few our of get rate communications quarterly And right? next between business, run million you to into closer is $X.X which kind Terrence said industrial

you when to do that that think what’s going say, okay, margins. look and I at you for

is contract – so Within price OEM implementing were that that in And the prior by of benefit full call, And just in and us negotiated outside was half with price our in all a transportation, in our to year. OEM we through it we effect. the largely question versus the as the margins contract get been and was have of Terrence from get the time that growth we’ll through gives in in far that long coming that way walked work second content. we’ve confidence a successful the market this by discussed that addition we

around So look the we confident feeling transportation as margins we more forward.

did how sorry, that as the more you industrial that which have bit QX we move the industrial forward fiscal it. is QX industrial the saw the the if margin at here and We’ve I’m the feeling into an industrial side outgrew of segment the X%, within Industrial as fiscal mix in things. order albeit segment, our business business, you it business challenged, pressure modestly right? translates impact. front rest look our And within the at the segment. equipment side or that, while And got a equipment revenue highest that And impacted grew certainly is far the is within a on it and – of that equipment

rest of work impact And we as the the we’ll our year. an have way through

lower have our margins is than the which business sorry, defense, news for equipment then also Terrence seeing help. transportation Now And aerospace Those, do and structurally medical the mentioned industrial levels yet. to air our as albeit, within highlighted our not commercial energy back business, business, this they – revenue and transportation obviously we’ve pre-pandemic call. is good increase commercial we’re volumes commercial on I’m

And so we the on front. still up are margin catching

within wanted cycling with our if modest equipment that some those things expect right also a on improvement perspective, we that some directions. you discussed year is through assume a putting rest business [Technical roughly to the of good pressure as QX industrial But is million things margins. I There’s Wamsi, trending there’s straightforward. in from So do down Communications the a modeling is Listen, already. then Difficulty] it’s move we from mid-teens level, we’ve our quarterly levels think segment. the So And $XXX pretty

hopefully So that question. Happy answers your to anything take else.

Wamsi. you, Thank

We question, next have the please.

with is next question from Evercore. Amit The Daryanani

Your open. is line

adequately chain availability supply on better hoping what Perfect. inflation price seeing I’d inflation could from I side, increases was component perspective, the spend me talking a you you just do And is could folks the if the you just if auto I an offsetting think this secondly, a from needs in done production understand quarter? guess, then also a the Thanks. from far side. are perspective the so And to just here? and what really think time you are I are love about million you clarification, I you estimating units. or remind then think to IHS more get that XX.X that June if could be

sense into get of you. love Thank the auto So to guide taking kind what are to side. of I’d a production you

sure. Yes,

me we’ve one Let of of the we’re environment year, to of And it’s sort last million production going the that said, beginning around from first, million be to on a changed and be hasn’t just XX in units to all the XX flat going total. do auto year.

think much are but it. that some we viewed I know the vehicles there’s we’ve IHS transportation, heavy pretty in commercial that’s flat. how our differences And that of about So put number in we

I I about earlier the about we’re it get talk chain is does is how talked about little interrelated. a it being our our Difficulty] supply we servicing customers. into is whether of chain bit supply all it orders we’re it’s into think chain, markets stable, is when servicing Because And why I come customers. they’re that some supply stronger levels I do inflation and [Technical want give to your how price, whether On before service

are I the would to at our you TE level. TE tell at overall overall back XXXX what And levels service level, the

recovery. as are commercial to supply And seeing need service has levels late improve. higher, people service some the air and tell is main we’re the people would you chain improved. were still servicing the chain improve markets levels to reason Some still There are better medical, I like need which were our impacts. in supply

But I tell picture, at the you the big availability what would supply global improved. has is chain the across

think Our I also a is it a us. sequentially orders factor. And from feeling see we that why and up element some I backlog that’s our explained and customers stabilization positive think are going key

done And of would just worse. places years. stink. inflationary where moving incurred elsewhere, have you over really we from we is mode a we’re that could do why past the feel sideways. it’s the you like the deflationary we about margin feel freight we’re it’s getting we will why sort wouldn’t of wouldn’t impact Now pricing I And in think say with transportation we’ve and impact, getting what on say we that’s impacts. that the an inflation I the lagging, tell better. that things pricing, seen it’s good in when two expect especially we’ve it’s do I tell and logistics, I recovering

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

Giordano from Joe next is The Cowen. from question

is Your open. line

good guys, morning. Hey

Hey Joe.

a your then just on of clarification other and One and question industrial an markets a quick some here.

pre-COVID like up look industrial level. obviously adjusted equipment are those even inflation M&A still a Just do have there’s picture, end lot from but I at here, in in moderating moderations, something a even a or like if local And like, China on of EV, Tesla you between big kind spread content. of and type then bigger low vehicle a high-end IT with a or terms for manufacturer

something much if a like over period. a like we that’s lot real like for reasonable should but fairly a that, a how moderating markets reset short an is like think Thanks. So like economic now downturn still in those up – of

Yes.

both take Let those. of me

when on think China have anytime off, a start per a us, think electric content with, first multinationals So move growth because both an especially, combustion and from I for locals. what from you you vehicle engine, to to vehicle, is content element that’s with about you we’re

comparing about be thinking think because them. So it’s to really drives a I position on between, good do have content growth, is it the thing content we about bigger not

car, upon depending to what’s you’re come vehicle. in features the into always the combustion going electric have, vehicle’s a to or whether of it’s going And classic

of thing driver really So said I is and driver to car I a Asia over electric we’ve vehicles, new the think the China’s is XX% as that think real growth it’s And growth good vehicles. our for overall of us. or is always all sold key electric

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you, automation, – is, different automation, factory there supports weakening seen factory that that be us. come I things let areas that commercial of to Also, So process will of a bit the question I some what tell add only broad get you and into into your automation side. There’s equipment’s color construction there very number will there’s me building construction, automation. element electronics, buckets would in it’s a positive automation around go where where consumer of industrial industrial element into there’s the areas equipment, we’ve One you there’s little downdraft around space. a think that and building for that

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

Research. Scott with The question from is Davis Melius next

is open. line Your

guys. Hey, good morning,

Hi, Scott.

you gears a something this remarks, have this prepared I want powerful that bit. pretty you a is to the be little or to multi-year driver could for And switch this nice times material AI guys? demand Is of of a how couple kind cycle? mentioned but a kind is in upgrade

Scott. super, No,

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that in that’s of of multi-year one and low those importance things latency where also you position cloud need. is So cycle ourselves will higher we is get a the said the be the speeds into nice I you like

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

with Christopher Oppenheimer. The next from question is Glynn

is line Your open.

thanks. Yes, Good morning.

wanted but EV maybe a pull push dig bit Transportation a bit. guidance, little more Looks above more. chain little always forward to or revenues guidance production Just likely there’s line and into some supply in timing like launches out well it around your was with

expect like in consistent the revenue back calf. you sounds So

what So volumes expectations. versus just curious came with really changed through the there that

Yes.

came what it. well in utility between was would performance Europe would’ve So when customers, of were coming else going I you business things think look we that from aggressively lot war. tell you area quarter into we don’t they’ve as thought a out and anybody I on was is this really this of and cost perspective our our than past we one more and building of been saw as over Transportation at year And Europe. we into the when it, in that the OEM energy was And an a of a typical our

service that to the China’s back you view, and isn’t of China. talked on When it that’s bit but we’re the a about a to little really not when I due we here. you be about our the the think going were them choppiness much nice in they you And slower, sequentially gets to half, really flattish half, go when to is, and half really different. what’s first little changing back which in just second able Transportation sort down wanted half,

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

Matt The is Stifel. from Sheerin next question with

open. is line Your

Yes. and everyone. good morning, Thanks,

Matt. Hey

seeing within a I industrial you’re got Terrence, big had equipment some question imagine regarding feedstocking market, are your to come you’ve industrial and start seeing are the expectations the distributors a know your to markets anywhere inventories, channels or else that distribution lead to at in? I distribution play I particularly concentration that that cut going of as but you out continue that times

Sure.

segment, So to a right, chunk we at couple channel when in frame everything, of things a in chunk to goes and certainly business partners big aerospace our business. exactly Communication big through play the you distribution in goes our channel, Matt, and our our through industrial where you’re really just look

service Now output what and get tell to ramp, to before we to continue aerospace would they where backlog orders levels to in our I is increase as and our service builds that the the to need you were continue grow, certainly business, continues backlog pandemic.

talk sort of trends in you verticals. So distribution we that do about our channel the what what different see in business you is see mirror

back be those our in range. trying and ODMs next with partners been So to when something our a that bringing talk to their quarters, down Communication been around end about manage down. levels distribution and inventory, seeing few a started the They Order of units. that quarters partners, inventory million were their we’ve already, we And certain what it’s a $XXX level. inventory, it’s includes down that’s OEMs – we’re the at better probably distribution have getting bringing going inventory, it’s at couple segment come that our of at higher have to

the levels. it have would some Industrial I space, comes tell impacts, say also would we in seen you part service of I but to

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of partners that the that be And distribution inventory at. we our at the to the range see levels end would do want are higher

are to the So that’s inventory a that segment. little in down why Communication their extent not the bit levels see but we

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

Morgan. next The question Chatterjee J.P. from with is Samik

open. is line You

are for relation autos thanks terms outlook your all choppiness the match guess all different we for end cycling China, up comfortable you here. end I all in also of outlooks sort pass orders caution take auto yet? in what aggregate that you Is markets? just around to particularly, Are to a as on autos all I in pretty in but was the you. sort end you markets. you markets to more trough relation the trying production more thanks material has think seeing touch activity China in in there up you I we the the in question. Yes. maintaining individual maybe aggregate taking if are when know for Hi, And of my Thank it through of about I the just year. it color those that or mentioned by step can

of couple a so things. no, Yes,

As I said a thing big the the think automotive realize, on And Transportation, China we our in market XX%. in our does build quarter. December they have orders other I to up actually were

have production sort step the pretty do of in typically, the you down second quarter. to it being So flat China we for where and view fiscal a China was of year rest auto our in

meet forward, production an see targets. producers So now. that we we want do do big I December of look choppy highlight acceleration is And typically auto to but build to Chinese don’t quarter build, the right a it as

hey, pause out? it. Chinese settle of an comes is The in does price intelligent watching certain this little consumers Certainly, creating think to it China, I We’re how to a when price. the consumer is bit activity consumer say, for are that doing OEMs

rest here when some it’s from year. we flat So that production there our going are creating some but auto of are look China near-term for things be choppiness, the in we fiscal at view to

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

Advisors. next is with Steven from Fox question The Fox

Your line is open.

color year-to-date morning. the you’ve are on Thanks. based like what good the plan restructuring of in slides, would year. looks flowing those to It on statement? there into and is more to kind taken Hi, any When saw curious are for Transportation income getting that date on helpful. through be benefits? the I it? the other I was What segments you going return just and How charges full

our XX last early initial business were recall, that you said and year. about we and we’ve the which would days of And XXXX, discussions with obviously year Board, ago, flat from and we the increased part million. did call around in Steven. reevaluating by the to back then Thanks, prior out did, we said $XXX million $XXX the when was we restructuring somewhere that went We I in in Sure. million, Yes. as $XXX view into with our be our

that right. we’re accelerated you this that some that determined some consolidations some we some cost equipment in pull it Now structure, to we things get that parts of is in driving done and and of both doing have more ahead downturn is capacity the in There planned is sooner that handle. TE addition Transportation, other had the and we’ve to adjust chunks, to in there in the can accelerating been business Industrial incremental is the you of as rooftop are want in and imagine go to just Communications

So that’s it. part of

of Now, when a bit with of to into restructuring is than and little do been the start the that has longer a And based Europe and constructs in a little and more bigger with based. chunk it world the of bit you you’re activity country parts couple just getting this dealing has demographics think trend requirements. Europe has payback, of you past years the over other in would been statutory what the

incremental this to together. nor and probably for say little has would been I historically inside our it, said traditionally we’ve that, kind That’s been especially how the payback blended in lower this, us restructuring years. at side benefits business. it’s It’s for and flex looking nimbleness years a the longer It’s does you’re of stretching that payback if on cost just So out give two of of structural bit piece. fixed that’s to and give more quite terms for we’re fixed the the but of maybe really cost of X.X us what thing to it aiming reductions on the not three

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

The from William Securities. is next Stein Truist question

open. is line Your

for Thanks Great. taking my question.

XX of looks connectors terms as Analyst a the the voltage part highlighting the as transitioning executing and it of job excellent recent And next-gen and how in suspect in well. consumes architecture. their to content in in lower an then done have they EV showed all content the At also of like against significantly You the I volt it. vehicle opportunity platform, this Cybertruck Day, Tesla’s cabling growth and

to the about talk this it’s still a OEMs Thank this any brand your already impact you. might and which have business? the the other trend think have if and or you new at in on Can you will degree if become com what

Thanks. Thanks, Will.

get it. first have Model So simplified into Model is content think versus S, I when X, a more which even the if the you we a thing this, has you take on harness

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simplified you all electronification. we goes into talk zonal architecture, talk of from if we harness, and So the the about through into when you plays get not increase about part – jump same content that only a of

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for bringing it’s up you Appreciate a net-net, us. the So positive question.

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

Baird. is question next with Luke from Junk The

line open. is Your

you or question. versus margins volume can the taking for so Thanks might you being differently, developed morning. wondering as are that’d during envisioning Question to higher pull that this too. view in quarter or I’m get Industrial you mechanical Industrial. we are morning. finer Heath, like half, areas within Thank adverse right better out now, areas the that in growth in the the look a you’re those of in to performed back in exciting great the be the how there in that you segments maybe more saw levers point excitation half? mixes could on back your change Good what levered Heath leverage think margins the for And the sub if mix you. put should

less obviously in worried worry Sure, of beads of I Listen, a our of it what a segment mix which other Luke. up. that that XXX, basis mean, combine we’re industrial all is coming thing can off of the you pretty from significant, we’re of about business, businesses terms anywhere more run equipment profitable than of in the the XXX if those the points combination as

restructuring for the nice going way then the that undertaking is obviously cycle of impact that on to we’ve that. that of is the minimize margins part challenge that enjoyed Now, with just helped I and mentioned the down help overall segment a the to has drive the and some is

pieces out you mentioned growing the were The other more side as that through. volume is of getting leverage

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volume business back Our as the nearly pre-pandemic we’ve but seen not there. to to profitable, is leverage as we’ve see levels volume get started medical

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bit in a about to we’ll on feel I is pinch for get mix where near-term point this impact good us. of So the a

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

with next The from Research. Wolfe is Patil question Shreyas

open. is line Your

you In past, about downs much. so pay that price typical you’ve thanks talked the Hey, customers.

to automotive it’s I normally your X% business. within the X% in especially range, think

that You have to again. with extract start kind through if those taking own supply the base that? chains restructuring broadly last drive price your And wondering been savings from of to you mitigate with downs to years of price have stabilizing, customers are help if supply you I’m couple you’ll productivity expect able recoveries. so, or But over the

I price where question. really typically automotive stated. you mode we’re occur, think having where business where I still our it’s we’re sort to customers. our does that a that’s see for So inflation’s and we’re say, D&D for and in in an don’t do with discussions really those the types the TE Shreyas, recovery you that and with that you like our of of like think thanks there’s close impacts, there at yet, is element and

because half, places things outer was that, years. but we deflation real that the we’re hit as if our – customer how like seeing there helps to productivity patterns like may think deflation, into I to the we we drive like they But there it into does back second those world, come if do something that volumes could and comes get get down things around auto. not that’s in back the be is cost something in in going traditional

you, Shreyas. Thank Okay.

of of you on joining cutting that in please from at the we earnings you so audio if up, some are publish TE. Before have Investor the for you website had going a nice we have and to questions, everyone we Relations Have that you and today. shortly. contact patchiness out, up And we Relations of morning. portion wrap us should be heard Thank our script Investor any Thank

Time today. today’s today, call gentlemen, for conference April XX, replay XXXX, beginning at of TE website. be That available portion and for on AM will the today’s Investor Connectivity’s Ladies XX:XX Eastern Relations conference will conclude