TE Connectivity (TEL) 24 Apr 242024 Q2 Earnings call transcript

Everyone, thank you for standing by, and welcome to the TE Connectivity Second Quarter Results Call for Fiscal Year 2024. [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. Please go ahead.

Good morning, and thank you for joining our conference call to discuss TE Connectivity's second quarter 2024 results and outlook for our third quarter. Chief Mitts. Terrence are Financial and today Heath Officer, me Executive Curtin; Officer, Chief With

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

of measures accompanying In this our address slide to the presentation morning, certain press our use you discussion sections ask that in of addition, these we release use we review will items. non-GAAP and and the the

be can on along at with The Relations the of the press release related portion presentation, Investor and te.com. tables, slide [Operator found our website Instructions]

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

Thanks, everyone appreciate joining Sujal, and us we today.

along before do our versus what XX I'd to a we're days provide take call As ago. into highlights the to I want normally with to slides, I do seeing moment like performance get some

We in continue all our largely in our this line being economic backdrop, markets environment. segments. X with in performance global second our Against dynamic are growth of in expectations, with resulting sequential our sales consistent to the of a quarter guidance be with

levels we you sequential orders addition, in on more order I'll all with segments, improved experienced in details growth in provide call. the later of our In orders and

fiscal highlighted margin expansion. items key committed results execution operational drive to and non-volume-related reflect levers margin Our against the to focus performance to XXXX. coming on we our into We you benefits from

year-over-year adjusted basis margin share these on operating points. as per evident delivered in earnings progress are XX% which results Our XXX by was our growth, of expansion adjusted driven we

margin of to were we versus continue deliver Adjusted performance the strong up year. operating prior expect segment remainder each the this through and margins to in year,

the by double-digit points growth to environment. in we made, expansion year, this we've operating hundred basis of that improvements of couple fiscal expect even earnings margin deliver slow a growth adjusted the With driven

expect of generation $X.X cash record XXX%. strong high the in flow our is up over of we free model. billion, this the year, delivered to prior deliver of cash flow earnings be of The our And another cash XX% quality above versus to half year we Through conversion continues reflected which first year. free

cash over deployed far $X.X quarter deployed acquisition to approximately the $X.X shareholders $XXX With for billion in this we being million that and year, returned being the our last strong so be billion will segment. Industrial Schaffner with generation,

to Our cash to opportunities shareholders generation model bolt-on both continuing activities. and return to while to us confidence continues give M&A support capital

in call So seeing our let days share our XX me now what ago. we're since market

global to remains commercial we of and expect view Europe end with grow the still Americas. production our in view, this transportation Our year, slightly expected both end prior markets weakness auto markets the while transportation unchanged in from in to continue

continue see destocking impacts seeing our both to end momentum third the In our year-over-year in the and Because these in Communications the to we of cloud in trends, of applications in the are we to to quarter. AI return growth our of Communications segment businesses and segment, segment. high-speed expect coming this

see that X the Solutions momentum. of X have growth for X We out been saying last the Industrial our In the to is same our months. continue segment, businesses picture we've

However, our to be Industrial Equipment impacted by business destocking. continues

As seeing to later the are pointing a think we Industrial potential fiscal indications business, we early this about normalization year. Equipment

third call, like quarter an headwind other currencies I'd is thing well. growth have in our increased impact resulting this the against other seen since we our in quarter, one and then and the strengthen this and And as to earnings earnings dollar to highlight will is second that last

pillars. lastly, to centered And our value is long-term that unchanged X want creation reiterate I remains and model around

production. adoption secular growth around vehicle artificial think And applications in global and portfolio intelligence growth First, of trends, energy, the hybrid positioned and and electric including renewable for when our is you strategically cloud only and from include not features. well also increased we increased the vehicle, vehicle software-defined benefit safety trends electronification electrification as about that as but comfort the of from the powertrain, the we benefit

second a investing levers is strong cash drive is shareholders economic pillar model our performance that opportunities. through And third bolt-on an of lever we that to we've cycle. return to strong margin The have value operational to capital M&A creation established generation in while

our Now for ask I'll the and the outlook with turn the hand quarter, and presentation. then third well get that will I'll I'd section. of second into in his it into Slide to more off details as quarter an the get highlights Heath some X, overview, let's discuss you as to as to who for

guidance sales sales share in up at was this was prior $X.XX, which with up performance. the delivering in year-over-year, per versus margins which basis ahead were was second XXX were of on line earnings XX% guidance operating organically operational Adjusted driven by X% year. strong XX.X%, and our quarter Adjusted $X.XX and was a billion, expectations. our each with segment our Our up basis, line with sequential points

We approximately and are quarter third billion, include a dollar. is both tax growth earnings sequential exchange is Transportation a expected be offset basis. currency $X.XX year-over-year on rates. to Adjusted the per a this stronger by and expected up X% and share $X.XX, driven year-over-year Communications growth by approximately it expecting and and both headwind of of to reflecting effect be partially is does from $X organic The sales year-over-year segments,

which well purpose away issue of that customers. both There we're expectations number the from are commitments around moving just Connecting responsibility. a internally, our financials report, World And corporate driving our for line one and goals our second. initiatives as as are with just details our did Our our our from in We

bring initiative. gas And these key to targets, X our we achieve reduction Scope did past that Based XX%-plus by that in I reduction greenhouse Scope X the set the Some both to have we want a been of X Science years. also Scope up and over you and X the highlights validated is emissions Targets

that quarter X. Slide our the and on more of overview outlook, starts let quick orders, on into get a as that with me So and details

highlighted improved seeing earlier, levels. I order we are As

above And Our in most $X orders time stability patterns X.X well is as is orders do with And sequential billion, up been consistent levels that and to in above each we $X we're X% as providing are that really, segment. book-to-bill our the our growth years were first indicating sequentially billion the serve in this that of our markets service X. believe we end customers. to order have

to orders a in sequentially quarter. XX million getting North we by offset forward, bit We that roughly through units to auto into production sequentially saw units orders going weakness this in declining And auto Transportation quarter the the as Now grew we year. in per weak XX -- incremental America. production half little below million move China of expect production segment. second global be despite second fiscal

half grew AI increase in for sequentially, In we orders in data businesses. destocking driven design markets. orders orders equipment in the in saw win delivery segment, ongoing momentum by segment, industrial this X% our and and in reflects the And device our XX% sequentially, offsetting Industrial is of reflecting programs, continued XXXX the end in center that is about our data growth Communications momentum our and

declines I'd let with offset ask and that double-digit I'll Transportation. discuss me organically with now In and overview an our North Now results, start Europe. and segment in orders, business growth X, of in to by with grew Transportation, you China, Auto America Slide as to turn X% year-over-year

adoption consistent EV production levels strong Versus with expectations continued While seeing XX vehicle global increased and prior a in content view, vehicle. dynamics auto days with different our our for outlook production by our are have per China are we ago, region. of in expansion

their both of we'll by Factoring adapting In OEMs this production production. in dynamics, XX% to mix increase global consumer to North EV America are production fiscal align basis, Europe, hybrid with year, to and expected engine combustion and on in see internal better are declines and continue a these preferences.

be full will the content on give a our our versus which increase higher auto electrified in vehicle and team to EV sales strong combustion hybrid increased just platforms. a X.Xx production and Asia, a The a position. largest is in And on per our higher electric you Xx driven by reminder, powertrain internal is where region has autos

established growth have expect at to points. start-ups X continue X to We all global all major a content of platforms across position production vehicle and leadership above long-term and OEMs

the down America markets that in as North we growth this due in the declines this saw here to and expect business, third driven return decline, to X% declines was approximately Now Europe. as and market mid-single we China. business Transportation And was these digits turning organic in in the a truck expect serve West. be to this quarter down well This year to Commercial by in by we to be market the a offset heavy partially sequentially

you market and products. industrial by Sensors to that business, sales about, as continued optimization weakness continued talked organically we've to lower-growth the driven portfolio well where our lower-margin exit be decline to we've applications In as in

Transportation were For above the adjusted at XX.X%, segment, operating run levels, margins our to we and this for which year. target expect rest target is our margins of the slightly

powertrain, applications to vehicles and business for high-speed around data increase leverage -- the signal for next-generation in engineering in in invest the continuing to power are architectural to next-generation Ethernet of support our investment We shifts. miniaturized vehicle Auto our or electrification the our and requirements they're products whether

past at were of continue the Energy organically In we this into we've second in growth businesses. level trends and see the Slide Solutions in Medical continued our saw for we segment Industrial X. while growth the Now that let's X quarters. few AD&M, our X% sales X And segment, get discussed the and on we down that's the businesses. expect segment, to in quarter, And

organically, Europe, growth the In by in in organically, AD&M weakness commercial were up markets. increases sales strong growth Medical, aerospace in ongoing procedures. driven applications. in the offset the the interventional renewable And second Americas, In up sales with momentum defense by and driven XX% continued our X% in in we organic saw by in were Energy, both quarter, quarter driven

sales And then XX% our destocking, where continuing we're down finally, the in see our were Equipment business to organically. Industrial

expect some pointing declines next business inventory adjust we for in normalization order their the stabilization in seeing this patterns see our we're year-over-year of this customers to couple quarters year, While later still as to levels.

perspective, with current levels volume mix. and a the given segment our line achieved in which business expectations On was margin Industrial XX%,

growth. expect business We to Equipment until continue to segment Industrial run mid-teens returns to the into the margins

let destocking you Slide and growth excited cloud I'd largely return now behind to that X, year-over-year next-gen applications. about the I continues Communications, Now segment. turn Communications and build quarter our get into momentum in are In in third to to ask trends am a me to us

we expect our our upon Based investment and $X to year design to from revenues Going win momentum the forward, where we are build deliver $XXX we revenues to this AI now our artificial growth double to $XXX from next following of higher opportunities. year intelligence million billion annual years. roughly momentum, achieve future on to growth expect in this expect increasing applications million to support few

play, to designs And remind Also, in that to compute are with needs compute accelerated you on XX% meet low-latency as we're we Just as call we versus providing working of TE where cloud leading focused we more platform content connectivity generate solutions. artificial semiconductor well closely companies intelligence workloads. reference Connectivity the servers. out customers high-speed, traditional with

This segment over in up the margins sales points quarter. despite this last XXX of XX.X%, operating had was the decline adjusted second basis in and year

investments well, and supporting this for as segment maintain margin we expect are to move in executing continue high-teens extremely to growth. through year teams the Our while we

expect we margin As for of achieve segment volumes the time, over XX%. our increase to approximately target long-term

that our segment and financials Heath, a me who over expectations more going get hand it overview, on details to forward. let as into Now the with will

everyone. Thank you, morning, Terrence, good and

where and million an $X operating charges. details income $XX Slide second to $XXX more of charges X million million will was on adjusted provide operating of quarter Adjusted income $XXX XX.X%. and restructuring acquisition-related turn financials. with million Please of margin I other operating the and was GAAP included

unchanged, approximately the our full year, XXXX restructuring be million. $XXX are For to we continue fiscal and expectations charges to expect

approximately XX% third adjusted effective the and and expect the and EPS quarter charges $X.XX, rate of adjusted and $X.XX QX. was $X.XX. rate tax and GAAP Adjusted be of for effective our And in the tax was The other restructuring included remainder was year, to XX%. EPS we acquisition

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

X is Now Slide if on were in sales. segments basis X. of margin was Sequentially, a Adjusted basis. on XXX down year-over-year, we quarter, billion X% down organic all in you basis were which operating year-over-year organic X% reported the margins growth year-over-year, points and expanding XX.X% on in driven expansion and second a Sales by this $X.XX X% to an expected. turn basis as saw

this volume-related, a share executing growth Adjusted year and margin dealing focused operational are has that that We strong strong enabled earnings environment not by levers expansion have the XX% with. this driven $X.XX, number despite low margin are on we up the expansion. of year-over-year, been per were on

million, Turning in million flow to was operations our cash first half up and Through second is $X.X the free the flow. XX% which free billion, quarter. cash cash $XXX was Cash $XXX from year, flow year-over-year. fiscal of was

unchanged, Our long-term capital approximately cash for X/X free which strategy flow to time. to bolt-on remains is and use of shareholders return acquisitions over X/X

earlier, cash conversion flow XXX% to mentioned expect again free we this our As exceed year.

in our we me excited over I to about let questions, are current we macro key thinking performance how environment. about of before it turn some share points Now reinforce and the that the are

driven the markets execution applications growth, are future to growth drivers, secular we just strong that with strong EPS time, Terrence renewables investing intelligence expansion, and automotive, the by levers. margin delivering same operational are discussed. including next-generation in At artificial on support We

We future of are indicating we giving our in seeing serve confidence order segments, the growth. an in and patterns in of improvement and sequential most markets stability all orders in us growth

to Communications momentum supply in third our data segment is growth the as as both of normalization well high-speed reflects applications. center which quarter, returning Our in the chains

cash are And capital. our demonstrating generation strong deployment with a we balanced finally, model of

ahead So all value opportunities we very drive we excited us the for remain to about have stakeholders. creation of

call up With questions. let's now that, open this to

the give please session? you for can Q&A the Dennis, instructions

line with Sachs. Delaney Goldman of first Your the Mark question comes Instructions] from [Operator

you I'm hoping plug-in at BEVs auto customers auto underpins you and help more in they on EV traditional Could on least be more understand especially term contextualize mix industry more to positive toward growth by near certain keep and what made product auto, the TE's as it has what take impacted announced they're OEMs to auto previously several as to targeted. more inventory down slowly growing? might than the they comments to constructive view extent can better and Or on shift focus their hybrids to decelerated better Western adjust have intermediate needing planning plans?

I things this global one of that's always that keep and got do I the in And when Mark, question. appreciate thanks, to remind know our I position, great of important front have us. the is we everybody No, to we and

world, be, have as consumer strong we North well lot do though China auto have the Japan in preference of some this made even a you've in think of of XX first the some players increases of various production of So you to we seen back in planet have seen we do went on still as It's year. up you vehicles shift. and production, as well interesting, this weakness have in here all, if production, be on what's moves And offset both around going China, we by because there's been Asia to as the think it's would America October Korea million around we slightly that position a year. back where outside and said, auto in that these

earlier units at were this that's it think we when expect is uplift other category, the we in units about where very global about which of plug-in EVs and versus always it on includes hybrids year to at And e-mobility about that be The million probably thing hybrids, still. when XX what only content a them, you because off XXX,XXX look we've we year, nice all the basis. you get called

hybrids planet happening. that basis, today hybrids So vehicles this on and to still EV And EVs are the out. both year. and XX% call, all it and are And XX% said I the the adoption about categories are global on about of coming plug-in net-net, production on a grow is going

We've strong in with trends EV Now whether plug-in the a hybrids, adoption by about all have and region, position full ahead, across do very types, the production, we there. are you what steam locals. it's we China to hybrids, talked EV

continues strong multinationals. per just And We up. is EV China, content as in the adoption vehicle, said the on our as position have a I going with call,

move and the creating world, really to talked because year. help realize we vehicle nice growth have And is that for are EVs that us any double-digit all does see as you to In a got about, the a PHEVs EV from that of to the to adapting EV the it's more from categories, and And important hybrids. this shift Western you do shift we content regions increase. of get expected I

versus content people like it's So things around, like, driving have really been don't choices they some models make shifted while there's they certainly, what about as that growth. been

expect Now to please to there's confident be on always points don't we're of around remain But occur. the every at do X points. a look call, points caution driver. thing to going to not And is quarter you X content we only our to X it's last is above be the important we we X biggest X say production, And to it's in because can swings the in growth it that X that like also outperformance. basis always but content to the driver, EV

that for vehicle, the -- Electronification in other as for a all the that driver autonomy -- electronics that's for the well software-defined Ethernet as of that's vehicles, data unique go goes in.

whether growth for points of year. X so we and and we'll there X, us increase. be and that hybrids, content there between the it's of the And X.Xx be some either shifts drive on we why get X feel are categories, them growth of outperformance, expect this content all we or So drive the to to going while may content EVs about those constructive

than the Mark, So question. I it's know appreciate I wanted, you but probably more

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

patterns Communications especially to to respect and health order trajectory market you for what in most ] that you could applications right as of spoke telling here, legacy AI well about just be double-click what with now especially the says bottom interested hoping Terrence, from addition on are you Industrial already destocking. I'd Equipment. [ we look about in to it what in as

in which No, orders really tell upfront segment. first in Luke, billion thanks, my would enough, I is you, a And or growth and the Sure. X. X.X we you and stress Yes, said Communications appreciate that this destocking quarters question. can't have in in told time and in $X we comments, segment, the I the I Equipment above I years as over. above book-to-bill you, destocking, our segment our -- sequential Industrial segment. we always see And believe every the we Communications don't was is X

order and from also but orders well they're as we've the as we year-over-year partners, say of through through. activity improve the would we revenue trends our only Not I there channel things where see, the go selling seen where

and over, say the So would segment to see growth is about. Communications I as I quarter, next destocking going that you're in talked return segment to

The destocking one area that in we the continue Industrial is to see Equipment.

in in what Americas, channel see that and space, both also the partners has starting Europe in think We're areas later. see some lights be more see. results with we're quarters. And we commentary. We're going a and seeing started our for China that's there, us couple cycle to other still That it weak. do bottoming in think was evident remained a the there's but our I where industrial what to and I areas and

but do think -- starting at there's I do end to very I some of of front think light tunnel. important to we're see in So us, the that's the keep

that's our some growth masked also of through work sequential as and it. But prove us. has do you really I think stability get think 'XX, growth. outside I we through And on areas, we that will we momentums Destocking chart as what behind I see that that you be that's is those that. excited see we destocking it to tailwind about those And this a year see can order And work over. content think that and get nice finally the

with Amit line Daryanani Your Partners. next is question of from the Evercore

focus I kind a everyone. still your guess, Terrence, for of AI love very get to big I'd perspective, is

you just you see. to solutions? the cloud And own spend the Can go across that forward what to look some about that when to what talked providers comes conversion are time like it expect forward fairly trajectory any about providing really right sense revenue some NVIDIA strong us you you You as AI talking now revenue maybe on you from to their might companies like here? versus processor as infrastructure? where running be go opportunities And exactly does

Amit. comments, some made I and no, Yes,

told of So that always be we more in did for I we go the talked That And AI, revenue that's continued. the here. And different we one comments year million little where on does And about a talked in to give $XXX highlights XX% do to that's the changed. going all win ramp prepared bit AI were you would seeing was as we in this you do applications. revenue half. momentum, about design that we question. about of hasn't you about typically certainly, today thing we year, appreciate But were back really the the and

that momentum we design we also when years billion we're from a like ]. see on get next what a and And few $X expect actually double look -- up expectation to could that hearing million. at have we said year to after to customers, $XXX our call, the year $XXX the [ million But I of a math essentially we that path the

AI it, own investments And actually have there's when both who said, And the to service drive some this you place operations, our an the ecosystem, at from that their So look you design engagements, with are with in they're that's of it. solutions. seeing hyperscale like area, developing traction ecosystem engineering customers, when teams, making here. ramp we're are our we're to the and wins, to you

processor to semi solutions. and both and including silicon make other also players work acceleration companies, have semiconductor chips companies that other We the closely the with

nice that in So are job. when with you to at our look it, ecosystem, teams everybody a and doing we play have

are work get deployments. you you not that it's important customer them, allow that offerings further then with cloud as on are is ecosystem, ready-to-deploy really And reference sales how the And do one. across our designs then entire do as with

have, the really and I driving that's that have. we So that momentum the like we breadth

from product you it GPU. where with the against perspective, right that's a the starts And up socket at, start

and into that You that can the cable then a are make that you you board. don't latency are get keep the important have sure things high get where going really have backplane need things that on speeds do really And really the cluster also speed crack they ]. the to, to are you sure make you at very can things to the [ to LLMs

So performance play. products it's moving we up net-net, in it's really, next the the this to just pretty of cases, cloud broad we the And many on application. in in did level what

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

on comments prior just low-latency I on could that. AI. share applications? ask high-speed, all How these appreciate I the quick around in the your a here you question clarification thinking Terrence, If are about

bit is wondering little destocking an if fiscal comment end. was could beyond to a question, I my seems 'XX. you coming for And It like

Your markets orders growth are Any here, margin fiscal is thoughts shaping and bouncing stability some the end mentioned you've and back early up a amount 'XX as over well. from on a of perspective? how in fair

Yes.

about cloud be think we application, to you in applications. share when similar in it the AI the So share would had

share-type the we expect think AI momentum broad we and had can of being when across look went and a the had momentum I COVID you when broad. similar and talked you again through thoughts we once lot, on a we that that, think customers, the cloud applications about at that the for I set during So

not destocking. at XXXX, I When the about it talk be is you guess thing look to first nice will

with not will know that the see it. IS. it So to that I one a starting and be something only headwind. turns, that you're been help that that will has and But CS, dealt we're in

wait I turn to we're be we to this towards get the think And have in that. what's think a And to end as our of start we here nice is business. get that to the already -- I headwind that to Communications a going tailwind fiscal rid of do Industrial to do seeing year. will Equipment So there later year with honestly,

going that. if we thing look just there's other continue in, -- I you're continue of think we going grow to continue start I wouldn't can in as electric world. broad X% be that top vehicles, into everything to have be auto year. in And the get X% you're we put The to to we a to on going we're big you that think view to continue to as you category we've peak at to today. are it production content but area is to growth I it's is with to then driver below at going to an boom the is going see 'XX, say auto to where where Transportation, think the And on AI look XXXX, benefit go element of The I proven you. we going next top

for So that we quantified you.

well in area think our going Equipment masked just the other has Industrial, And by a interventional momentum, then doing X medical it's commercial aerospace whether procedures, what's recovery around it's to is, I have renewables, remember, on businesses are what's in as growth on in is the whether as been defense. continue in in what been we're it that they whether Industrial bit little that going

So that growth think we the those seeing into this remain 'XX. types going to do year, we're of growth in they're

'XX think set do I nicely. up So does

I don't want a Heath, margin at perspective you from know all. talk to if

and margin effective sooner by expecting. of very which work We've then is starts we X. than on XX%, a been guide at to But done that we the margins, lines, got health I segment. about it been to that The we margins. actions FY footprint internally, consolidation talked price of exited target lot have Sure. we for this ready stages, which the where the do a target October question. in audience 'XX, -- not our we've there and we're even, the our they've The The we were product Obviously, we've sticky. Wamsi, good early we're Transportation margins, made strong. little about feel really appreciate business look and low-margin we've progress some that

The of know, that that, in within as is, environment. auto business even our driving But Commercial you growth head is of is holding which high-margin even a most business, a its Transportation that. side that, negative

we and we end FY off point jumping where So where our 'XX. about achieving in of are feel good for is 'XX

Communications you the ago I at side asked is be we'd year. X in million revenue, or really is And And here volume consistently story. where we've the teens tell as been today, really running mid-teens. this I -- in of a the months if probably sit of be X high $XXX Communications again, we'd margin-wise quarterly roughly me margin you had would

we've effectively the nice segment type floor within raised of that done our of the team get floor, a we high-teen So so look. more job to raising has and a a of

once I we to over billion of be $X rate target revenue we're segment, pushing towards that the that budge XX% margin segment. up for for annual And think the going

as we're not that's good areas, our some exciting area think call headwind a run feel to as and that. going we embedded high-growth in are starving support about been that's we an alluded this, So not a to and hiring see. rate. to as out And these but to businesses, the us, we We're to of reminder, Terrence that

improvement of towards of talked within a Terrence Industrial And time that the fiscal 'XX. The amount is we're hovering about business in, fair I call on to mid-teens. of Equipment of in but frame already expect that next going year the as go the business, lot Industrial has destocking the end tied the away. this a we significance

do there's 'XX. go I as into So we good opportunity think

Equipment the well, Industrial for The drag been the business down but it's segment other that's year. Industrial performing have make this digits on the business X units double within to hard been up

FY forward. up, of XX our good feel in year add making model this exit improvement that move Street we somewhere as between margin We to 'XX. that each about we about as we talk on Certainly, and of you year. going points ] up basis start all planning operating to XX a in XX The we're that for of if of all and expect normalized So operating to year-over-year. points change hundred improvement to margins basis able we And be [ start couple

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

if Communications, don't you on mind. ask I'll

particularly you're making Communications You mentioned demand AI around capacity in seeing. you're the the investments the segment,

time sort fiscal more capacity what's color that getting and Or some Is for us the typical in can you revenue that typical to point? now? time you investing back of -- in revenue sort manufacturing to fiscal beyond lead 'XX? If about is of between invest a starting the 'XX? the give starting What's between lead

geopolitical somewhere see is a just like there for you or where terms [ ask terms question it's are then granted customers Western footprint what the of in else? is? a in that do where customers side whether preference invest of the about manufacturing And world this expressing Given situation, you you ] capacity, in

Thanks, of Samik, A question. think, important. couple the for I things, that's

Mexico have we've had. been the locations investing, we we've we've and as Philippines the expanded seeing well this, as been operations As as in well existing as

that well to the some So for viewpoint, And think, existing. geopolitical that have. our of position have, options us there want was from sites we the I customers also that

a So I the is for when to along, do the going we capacity build say starting. ago engineering coming those some with make just years to capacity the programs and and of were said, and at as on well that, Heath look continue we on. ramping footprint few investments, And These work as of we're started sight there's as we to of thinking wouldn't we'll you about line like that's continue been also capacity well, this as that. to

customers that with work that's their programs their connectivity we applications. are trying in make these that our the in sure works it, to work to they're needed face on as architecture Let's tandem

and included continue capitalize So us said, ecosystem, Heath like of this to in on that's the it. working going positives you're And see we that in it's rate. to real run one have our

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

near as because term and like, your on on demand can even feasible? So with view AI is of we growth versus short, a handle grid this your -- robust on out couple-of-year invest are plans Like in customers can building now kind saying need how what the this these you Like like weigh to like the very how -- you even period a this outlooks growth customers all and support over your market for in space, these you the invest obviously, you of on are of is period? do weigh multiyear the to what -- achievable do a things? build side, like

understanding When we're the we outlook. customers work market they're the that with on they our on you, do programs our But requirements And the with. here, on technical customers then on have. Joe, we nailing would customers with that tell with work focused coming work honestly, of generation, on out the next our solution their I what we

tell That's with as customers. the we way you, So that's what I we invest we work focus would on. our

it's model get do to need So we the I from mindset. as they always support the they the our with our ramps hit understand that. expect that's opportunity that nice that of and and think customers things to And benefit that working one been our how viewpoint, we of the about

line next with Citigroup. Your question the Merchant of from Asiya is

Just if pricing. you could drill down a little on bit

have as in the I year, especially at fiscal past pricing towards Europe. How normalization as a Western pricing bit North this of think weighted pricing we least and think little you about from maybe and guys towards, moving Asia do into production America versus being go about comments we more and normalizing, margin at the impact say, 'XX? auto talked look

sure. No,

level. our were caught during pricing And we in first year, TE I approach And of we this had with think we finally with expect at on that off, was what at mega the nothing wave we always you this when covering look you year, told recovered you inflation. year changed our you to inflation margin see we When was, before, the pricing, still cost has up and we it at be look the neutral the that. this customers.

So yes, down go don't be inflation assume material on certain margins a think we we continue on where that Certainly, are I doing And to, make targeted sure have price doing we're metals. to things competitive. we can you where we increases where to have different pricing environment.

sit So they will input of of where's goes recovered, costs the pricing to big I forward, environment things there gold, the were around going a be where here. be where look that as is, the you and the trading, goes resin pricing copper, we think bigger where from material element driver we that is

is question with the Boroditsky of Jefferies. line next Your Saree from

the there? we through a tailwind get just about lot environment the destocking of talked Industrial to maybe then think line of end You do into talk from And XXXX? year-end. underlying about Could how you the a then sight Equipment you as destocking by demand

to the Sure. Thanks, Saree, welcome call. and

the of cloudy goes have both demand back environment a to XX% the we off, Equipment in directly business, being partners OEMs. had is because everybody, goes Industrial take revenue our step channel our our and about -- and XX% First with just remind to through and

area So where is role. an bigger play it a partners channel

when I at the environment, see you you, are is look where that continue the in side. other our strength, end-demand as to customers are channel to buffer would there's process component supply still But up get we they foggy it say built they the certainly partners that wouldn't now, areas doing worried there pockets stock as because we same. right were are able have well that off when that being about working surprise

aren't are we're of middle seeing our work-off the move But And destock and seeing seeing They patterns to is also see decelerating. period. seeing we what channel that both regions occurring. in with we're We're direct now, sideways. we start certain order we're partners. that right So that where

bit quarters, then works probably you'll growing what to for that get underlying market the going factory the we're actually in think see we you're off. back still have I And more 'XX, of those that get into have business little as impacts couple line, So automation. a to above going next as of

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

And about your mean, the Connectivity's a that about TE little into Tesla, was customers? on lately. it realize risk is get I Terrence, couple alternatives, of these wondering EVs they on customers cost that some for down talking competitive front the as products if a in I the you of some how lot any create help obviously bit prices to talk years? could EV of your next does really kind of need

do looking with sure next inlet, element do our do you that well. our the an they that on it you have motor, a value could be do and product part tell how battery any have our we know is does a Steve, that a a something play we there's of lower bring work as the customers to position be other cost TE. trying would make of that's down our excited generations point And connectivity cost so it things a think probably our even in say that how you the strong a such about quality? And put to how how product has one when really every position how do I engineer car create are to point. where somebody call, that does sub we you, due teams the could all pack, we starts do come cost in I you even And position could very that OEMs the automotive is on that just better through together, and I That's world to how this we get time global around assemble move that business. get a Well, this call, where that global is certainly, scale always important, those every and And stickiness China, other application I is point. are things into generation, that get in, of strong you not at the a cost sit that on car, be of next-generation the a because, a before opportunities

does allow very the you things to is also it EVs. And consumer that focused it how important EV the do that's making of sure customers scale, made of choices bring scale, do to one get And their platforms are opportunity where and being will always is excited to about our some go. we've they're having our technology how that with that helps been that the make

So sit world. make net-net, more it and do, also that's like innovation can making what there to the productive for but improving bring, they do sure the we're how our engineers you how

Wells with Langan Colin of line Fargo. the from is question next Your

to X%. growth ask, on the want Just side, was auto

I long-term last quarters? of target and the in X% -- in target outperformance. The think market the is X the target the X% the to fairly Why the couple versus is is think I underperformance flat quarter.

running Twofold. production auto global right X now. was about the We're negative. points would second above quarter, Colin, production say, probably in I

the always quarter. tell at individual reason an So there [ ], you, don't look we

a about the be quarter, Next the I get to range. above of still any quarter, X% But a X% to little see I into some nice for X%, think in year, we going good And the outperformance. feel be the you're that X% though. lot very range. will to you expect to on quarters things

Your line of Christopher Oppenheimer. next the is question with Glynn from

more sense. you if on vehicle forward can mix know think the could talk see disparate wondering similar and kind we way levels for makes kind said appropriate And I kind you of of Commercial the is of passenger and complexion Just vehicle about touch kind that would complex. the platform. to about that, for drivers, be commercial next a little of year.

elaborate market mixed year. you this I some So bit work markets if unfolding through you wonder a how little could see that you as on

Yes.

bit I down major a bus. the about has little how that commercial because, drivers truck obviously, market might transportation go your look we here to I'm on going point, to on-road X So Certainly, globally it. our -- to the equipment, construction half equipment And and bus, think also revenue, production truck you about X what's revenue about and they're of our and is levers. and happening when in that big the agriculture and

seeing is we're right is Actually, and What Europe, China and recovering. bus on now Asia Americas weak. truck and

weak So year. were last they

dynamics. sequentially that these even we very next down little And what we certainly expect Western of the So down. will some in to World quarter be bit market actually we much a due we're seeing will call, a China-positive expect is said continue;

rates On run global that bit in than we the market that's is next now, we think that that a think, like get is early minus a more constructive year, if that, are this we're get things and together, into world, But the the X% side probably ag into little all world. will Certainly, the the that, this more different. slow take would into around around year, environment construction and we or them and will right through expect get right we everywhere 'XX. little, we'll you plus constructive And now. that of financing a thinking a minus And year. you

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

I had the Industrial your a within markets energy question, Terrence, on group.

What's slowed had of March some long-term weakness it like You've growth parts last term terms but the position? chain. there the over of strong quarter, your and looks other of and in you're the there, it few quarters, hearing from of supply both pockets in outlook near

Matt. on I And constructive Yes, on it. say energy, no, sure. Thanks, very what would still is we're

in results our you the what think to I see very strong. here U.S. is see and continue Americas we

strong. We we see also do see not we renewables, global renewables residential where renewables, play, we we scale do and that utility do

to I a Europe. of maintenance is talked been down that's the growth. bit everybody in inventory utilities I my return do The a But that the of one that around see little we've an is about we where a softness utilities I element think little bringing with around on comments bit. will prepared that that the in are think the business say grid I where bit think world, certainly, pocket investing I of little

and And are of Europe the we still we're on business where much States -- energy. very So constructive global United is our bigger elements play. the

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

As the for overall? for about what just over to sustained In I'm this curious talked how time. point. past, the the reasonable you've do of electrification, the renewables, and we drivers got about recoveries we in AI think of parts past also equipment, and typical the should X% X% organic you've about TE look eventually about some to this communication how growth growth industrial framework organic company in we at think be think out year growth

I still about it. way Certainly, think to that's cycles. we're to going have think the right

above the you X% areas, about this to there to be growing be you we exactly way in and portfolio some be that we where may the flattish come like the at year but could X%, I a are X% a type take more around the point made, X% But the where when effects or the think that's destocking have about will think headwind right You than do constructive. will X back is year future. that that think to year

with from will final Truist Securities. come question of Today's line William the Stein

others. into ask reflect a and this X, Terrence, -- another really X you and maybe of X sort couple I'm that about entrants more others is question push There's going maybe your X. And also about content to here, AI. my X there's industry that these of than have defensibility the among spaces? about that protects you or competitive to those category? the attractive into against that opportunity their protect capable very meaningful Can what checks you talk makes new yet of companies X TE dynamics your

No, Will. thanks,

a off I high different. capability. but there's do being to, When innovation think first technical mean we're with a chips are the are that well. speed, have deal are going of I X the an is that that to, And TPUs I speed going think uniqueness. have these element are you very getting of unique. very you're scale think all I with some going is us levels of do to, we dealing you're very sit So when speeds others, here where That GPUs good different all us to the all there, you than when

I to our ramps think similar a the you is earlier the continually share very that our that we it to in that's it move was them space I question I all, to to for the be our between curve. even think life customers what you also I customers. expect that so also bring expect said And why competitive And And important us. have to cloud. up answered, technology to

connectivity it what life. role enable get it's to I the to really make how about, in really because we comes do important it So we important we what the an play sure we space, make do we very make Will. path sure think in And AI sure that's excited

industry we a well. on as it's capitalize it's our have. to great So a opportunity great Certainly, opportunity for

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

nice additional have at TE. have Thanks a Investor day. you please If again, questions, Relations and contact any

conference Today's call beginning replay XX:XX TE available Relations be conclude will a.m. of portion XX, for today. on Connectivity's website. for today, conference at Investor will the That time Eastern April the