TE Connectivity (TEL) 24 Jul 242024 Q3 Earnings call transcript

Everyone, thank you for standing by, and welcome to the TE Connectivity Third 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.

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

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

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

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

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

also us Thank and everybody today call. you, I for the Sujal, appreciate joining

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

that to positioned. our when this is calls what As environment. we've shared you in a TE year, be we think where dynamic I want means throughout minutes to explaining few of continue just in about And economic global take a

to like Communications quarter, have And continue from we are talked applications. and In out acceleration are see intelligence largest defense, X market, aerospace those energy on Industrial growth we and in our last seeing medical businesses. applications. well we on focused artificial as in our global we First growth, an benefiting And our we're to in segment, as returned X businesses of our off, stability a Solutions segment, automotive, basis. in

highlight just and general against we by industrial ongoing these in offset we'll are Q&A. where throughout in the areas, being call they weakness the to Now growth are markets, still

were in guidance. backdrop, am Within this adjusted our our and guidance our and pleased sales exceeded flat points margin I delivered expansion basis with roughly line that EPS we adjusted strong that third quarter the of XXX year-over-year in year-over-year.

As we delivered have performance. per and record our even our operating operational dynamic which performance strong year-to-date, in at look teams demonstrates earnings adjusted a market environment, share our margins

to execution key the continue into initiatives results coming Our to against we reflect successful this fiscal committed year.

demand slow We a environment markets. anticipated our in overall

has margin this earnings So been our driving and on improvement focus year.

to high in year-over-year, and cash Transportation Our teams and our have in I'm also evident pleased free Communications continues first most this cash be segments. the into our strong margin this quarter. and and model, generation we quarters year, earnings continue strong the do through expansion of expect this is our fourth $X driven of to our X The record flow quality reflected of with billion

bit later. me get briefly share patterns our detail patterns a in call into days our let order and order in market little Now ago, we're and our seeing what XX seeing in I'll what more we're since

with XX transportation, global for view off, consistent days in First production our is outlook auto ago. our

to segment, continue Solutions unchanged. our weakness Industrial view that's In Europe. We our China, incremental growth and see in offsetting remains in

markets earlier, end segment, our We growth model long-term in X continued value markets. before in reiterate our businesses. creation that X equipment in to weakness Communications into to And remains want our growth, it's we and slides, both that's are see industrial as centered of around get and pillars. unchanged, do I our X And and the to back finally, continue out businesses with said momentum I

along global secular is renewable intelligence energy, with vehicle growth of applications of for in further portfolio our off the production, electronification First vehicle. positioned and trends artificial and adoption is growth around strategically including the electric hybrid

of you're go drive And as in to set year, the strong economic strong The margin as beyond thirdly, cycles. this performance results creation that forward. second And are look through levers opportunity pillar have is more we seeing this we performance. operational have up quarter, we we value for and we

We expect sets to leading forward. equipment. and also to growth operating continue normalization up the growth earnings trajectory, as an aerospace, us growth areas going expect as drivers to well growth continued of benefit destocking from in with commercial like improved for industrial secular further along This

third his I'd outlook Heath you section. the with as he look the like Now into fourth into additional into And get slides. and gets highlights will of overview, at the could to get the X, our for discuss some that an if then more quarter Slide for as I'll quarter, details

operating third this by Adjusted momentum in per quarter year. artificial of up which year-over-year. billion were our up strong guidance was billion, in basis guidance the organically the with earnings Adjusted were X% of performance year-over-year, our by share teams. prior driven year-over-year up our was was line XXX versus X% $X.X and up ahead Our $X and at sales driven design and margins operational points were XX.X%, Orders sequentially wins. intelligence $X.XX, of

expecting quarter approximately year-over-year headwinds. currency fourth billion, approximately exchange are million sales We including of $XX $X of

to expansion tax up currency will with will you a fourth sales with adjusted $X.XX higher includes performance year-over-year X up that are in approximately be to And talked think XX% be you year-over-year quarter On this a expect from per earlier really full rates quarter another per about X% be what's we've the be rate. flat. margin exchange to we I which and of earnings get driving about you essentially the earnings year-over-year to and the share and when expected front, strong adjusted share given implied the for headwinds been market which performance guidance, see environment. $X.XX, quarter strong year both our

presentation we a that posted. the brief of into trends, get on more with let Slide on me order So as overview, X some they're and details

had billion. and X.XX of a X% to X% orders were and sequentially Our up $X.X book-to-bill year-over-year over billion, we

about the segment. for growth and order be talk Growth I destocking segment, us. will was and this sequentially. the trends sequentially driven orders order by as that level, customers I believe by we company talking both about Communications behind better. reflects business reflects applications was As and by driven appliances which in are grew orders AI devices primarily XX% data with over multiple At

to In sensors sequential a driven tied commercial general order really transportation that slight weakness are transportation, end market. and but you see in this was really decline, industrial our by the markets

industrial relatively Our sequentially. patterns order markets. end auto In destocking orders in continue were ongoing reflect industrial, and equipment flat to

on our results, into Now Slide X. let segment start year-over-year me segment get with and I'll Transportation

our grew against decline of X% X%. business global auto organically production auto Our

declines Our over points strong sales in in was with America. content more production North Europe double-digit organic China, and growth X quarter the in than growth offsetting third

our we expect we dynamics production in continue content see X-point growth longer as continue be to half production by to term well region different range. powertrains, While shifts X- in to to as and different some of second in the

both market vehicle. growth increased electronification to and hybrid be production and vehicle driven will Our electric by over the continue greater of

Turning driven Europe. by X% to primarily business. decline was you that see organic our weakness in The commercial transportation

single the this to West. be quarter and be again We fourth high down declines year digits the serve that in fiscal to mid- the to expect due we markets down expect business happening sequentially in market the in this to are

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

by over driven basis strong continued For were operational margins points on to the XX% up Transportation segment XXX overall, levers. adjusted operating execution

electrification the shifts We and Signal invest the for to also vehicles, customers. data powertrain, miniaturized vehicle, of architectural whether next-generation high-speed products our leverage global for Ethernet around continue by to support applications they're to in next-generation Power

year. to X% Solutions In segment, Sales the we've we Slide on been the trends continue get discussing let's to Industrial were Now slightly down that's same and organically. segment, see this X. all

Defense and Marine in quarter And business organically, both by sales the up up strength markets. applications. and In driven growth driven organically, organically, in strong momentum Aerospace, Americas Europe, ongoing in with medical, Energy, as in as in up sales by increases were renewable the were were aerospace procedures. continued in driven interventional Our by defense sales well commercial X% X% XX%

PACA our the As the down weakness you industrial the were where slide, can is for sales in equipment segment business, ] the [ see XX% on organically.

we While continue our as to we flattening, are year-over-year patterns in some declines inventory still quarter starting partners business this levels. of signs expect order and to see channel to reduce fourth see the OEM in customers

our XX.X%, was which were with and line levels given in operating business current segment mix. volume expectations Industrial adjusted margins

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

discussion the X, segment. Now if Communications and you into turn I'll could Slide to the around get

data margin design are am I slide, and First you return and off, grew on year-over-year strong organically, I the the order revenue earlier. to wins XX% accelerating can this In to devices, our our and growth XXXX. it discussed our see we than million we momentum. of about and excited as these reflecting over momentum based we And get wins, AI we are to expect upon expectations year, near-term into more this increasing and our $XXX double performance.

and organically, XXX stronger China. last the XX% XX%, driven perspective, volumes with by appliances margins basis Americas operating adjusted was over coupled up both the driven segment performance. In points had we over the From business, our this an by grew operational of year, margin higher

our of performance, let expectations who's So turn financials into with on going our quick and as forward. summary over the me Heath, segment get to details more this a it to going

I focus share be set that want Thank that this for and have quarterly year. a to you, morning, here we margins earnings earlier, quarter, we about financials, and third to the to I'm forward. good year, and the said We've momentum to the turn throughout the sit environment. feel able reiterate X. improving into margins market Please going you everyone. with Terrence, and has been dealing in are of And earnings. and details pleased adjusted the say before our something But to on we talked records about per slower I Slide Terrence good operating that get as discussed,

income Adjusted an restructuring Now Year-to-date, operating million margin included and $XXX details. and $XXX of million acquisition-related charges million. GAAP $X other restructuring charges. operating are million of operating was and adjusted $X $XX with charges of XX.X%. income the was million

Adjusted adjustments. quarter, was expect EPS For GAAP $X.XX, rate than acquisition jurisdictional adjusted the the approximately third tax million. to was XX% and and $XXX be EPS charges our effective of full due rate in $X.XX, included $X.XX. we charges some higher and to other continue was slightly restructuring, The year, to restructuring guidance

adjusted our quarter And you remind full to importantly, that now for expect rate well tax rate cash the the for ETR expect approximately effective fourth be continue just as we and to to year, our stay want adjusted I below our For full the XX%. year. we always, to

million and If was third driven expansion this exchange year-over-year, X% on roughly $X year-over-year. quarter, record a impacted year-over-year with were from share headwinds third the XX.X% margin $XX year-over-year, you margin on in to points and expansion EPS we roughly Slide in in we to basis operating by tax along expanding up the Sales X, expansion a sales delivered per Adjusted dollar strong $X.XX, a billion and from continuing Transportation higher cash headwinds organic segments. down that $X.XX margins Adjusted margin of by driven X% and currency flow were strong turn are Communications of earnings and by quarter. free flat our which with included basis, XXX an see were rate. sales basis year-over-year, stronger reported up X% year-to-date unfavorably are

well cash flow have million to another $XXX we year-over-year, was the delivered cash year to flow. that's third in and Year-to-date, billion, expect cash we up Turning XXX%. deliver of flow free free conversion cash Cash $X was operations roughly billion, and $X flow of free from quarter. XX% above

cash free we $XXX billion year to generation, $X.X million shareholders strong returned deployed billion and have so with over deployed far the With acquisitions. approximately this $X.X for

capital long-term us which to cash and supporting And cash X/X time. to just X/X shareholders remains M&A reiterate is to shareholders return for both confidence opportunities capital free while model bolt-on approximately of generation give continues strategy to Our approximately unchanged, to to bolt-on acquisitions return use flow to our activities. over

it are forward. going about how and turn me let some opportunities of I and we today key performance questions, points that And discussed before reinforce the we thinking share to our over

invest for Our team are while EPS is environment well. we delivering expansion and to growth. margin this continuing navigating future

balanced very the to deployment are demonstrating capital. growth. of growth well secular the We our free strong cash generation drive trends cash and positioned operating benefit We're with strong further -- from model earnings

we opportunities now all that, the for remain let's And open ahead value So excited stakeholders. up it very we for drive have creation of about questions. us with to our

Q&A the please for Thanks, Heath. session? the Briana, you instructions give could

[Operator Instructions]

comes Solacor Your with the first Daryanani Amit from line question ISI. of

EIS business. side, focused the really topic Are are on comes that big AI-centric especially investors the momentum clearly for on. a

wondering was talk look for both about is year on does growth your days you you about higher touch the I had the and So if just perhaps next what for customer would what versus momentum what driving and side you could this expectation the just And mix AI talked ago. also on comes? year like X where

I and Amit, question. Thanks, appreciate the

get different the into First of elements. all, I'll

applications. translating and customers. one that's are There a strong as realize built position is breadth position continues CapEx. into accelerate with with CapEx. the cloud the hyperscalers. customers It the and And you're have it about starts design We look strong cloud AI know, it across it, this incremental And And customer a excited that get put isn't is just across And most and it. with we to what previously AI at I you wins you hyperscalers the seeing of towards it's on when get the to and here. the

on Now order earlier. as I slide through went the can you you see said,

orders the some coming last for design take the saw we that see we will schedule up that wins year. You in, XXX quarter, -- does And communication talk in acceleration when this it or orders these XX% so and of sequentially. in were

including to and it develop you're with we on AI make applications. build us design with into it's necessary on acceleration the and and work processor sure we the million. solutions. get the both engagements have. speed, we next confidence double the have kind with, of make some semi take So seeing to gives of to the But them are the solutions these to silicon gotten, companies that's to And so the really that who customers their that are we've -- chips realize increase hyperscale wins least at that the with own other deal with up companies players $XXX why the latency these million also $XXX semiconductor really to high And other wins just low year you

growth I one of us really that a to the seeing said from few And do think we're needs just this scale this the is the here. And with across entire ecosystem. because where It's needed the I space and that benefit to before, engineering customer. is of manufacturing a not investment coupled happen as technology will the

view to do driver into design we as are talk So on I continue momentum updated the growth is orders, certainly closed, real. These of as like we traction have keep ones 'XX but to a always you in real going that you other win about. the top we'll and

question of next Our Mohan from Bank comes with Wamsi America.

you of both of And Clearly, I'm if And the in this in you over But just that commodity could environment pricing think X, the could quarters. we look on how the X from maybe some guys I the in quarter. and outlook, performance about terms this margin for the outstanding should in trend segments as color was in how communications know just rising the margins talk momentum. hedge. you're can what could light incremental share AI you you maybe about if impact very that next margin we wrap wondering expecting

Heath. Wamsi, take this is I'll this.

prepared I comments you some guess and color around our the So heard margins. of

we growth but of as support net-net, margin translates through some we're was very transparent year on the areas as into entered point top weakness some as expansion, the had which on hammering year. externally well. areas this focal well our line, as and Our earnings of we and We've were focus

been Our focus lever. on non-volume has the

and that sure ultimately, enough the So that's inflationary make returns of and then growth the and pockets restructuring is that margins. improve past in offset of getting certain sticking price the optimizing actions done. some we've terms portfolio to to -- let's in pressures

the segment. right of our range XX% that 'XX terms go we into And in how in -- in thoughts of opportunities we go, running beyond where in my we're industrial So largest and as those now. terms

to line equipment in have while, the see given teens in for That So continue now been here which the running kind high of we pressure where we with that our a Industrial. business. right in and in is expect our would mid-teens piece We're target is segment. margins margin we the highest industrial of

as of of we're we due so would to the segment, that and And our aerospace, medical. about be with think mid-teens performance down, it, head in which rest business the the being the energy holding

X and back industrial company X go return some anywhere communications, the to this the and particularly, more with expect think, else overall look years, support But tightly you it's margins year, in obvious, is improve you number. I but have. would over as when revenue, this to in we we margin at equipment aligned In may seem very if next Wamsi, than that business, growth, or margin we that past segment's correlated -- segment the

time so and revenue really D&D of margins this we and when then probably the back outsized you And part high said margins up it and in the 'XX, we saw both down teens. overheated. in in tick when to the year, back parts 'XX you the the into And mid-XXs, mid- at of earlier saw in saw corrected appliances 'XX, XXXX which was

that. target good to margins. to variability, designed a resource a $XXX feel the good and position we target revenue the feel and we So originally that business. then had about in we're terms that's of revenue, And get we're We're we generating you we We million about lower I'll margin where tell of floor at where that. that about are, in have and now raised

some AI there. have awarded and been won several investment is And there at required Now we programs. earlier Terrence's point,

our rate. that's -- run some that's of Now in

be and little will our well require. that both of in bit customers the programs produce the engineering frame and time on side ability our as a to that Some that's as incremental, these

as would margins I suggest should see programs, as well. that, But that segment think is on XX% which in those up that you it number margin a XX% range that you of forward, to some think incremental going margin ticks in support revenue for about that as revenue fair movement

that's [indiscernible] which And to got So year team were a we job levers thought, few driving years. than how that can it just segment. target seen team transportation, we much to to they the done margins, there some largely the ago, attributable a sooner in last inflationary the and And is offset take we to there. listen, and the some price pulling for terrific we talking really about has of have long then pressures that the is XX% of that the going

just studying a X some quarters, good at say quarter. new profitable I'd We're plus would transportation profitable model business, still number XX% a are sit tell to right target. to and it's this that I piece announced most you which going the XX% most is [indiscernible] and that. after piece is also there of But now. is not the that commercial our We

as we're as mix improves, we that that, certainly 'XX in FY into So like we October. feel good we feel position, about starting and a in step good

always we're situation in confident. So of The being that is flux. all said, commodity

our when come slow to we they As and slowly come down, uptick metals. come And those as commodities back in, you start see to do out. when that hedge they're layer mentioned, you in Wamsi,

reduce us So with that planning volatility. our that helps helps

operational process. the that forward, that's metals And that pricing or or see of think in improved are we we continued again. particular memory through groups lever will for teams things in pull geared has going this very I -- resins, muscle the else if inflation in one up As look anything spikes our we

on to we'll as outlook into come. that. more get So provide we 'XX, And more

comes question Joe with from next UBS. Your Spak

wondering back some common areas you like been just occur. How was AI. if mechanically, to more actually cross-licensing I interconnect bit us what how that there? can other for And little work We've in players this is the of would it business? does wondering some deals AI. hearing a about tell between I'm

that relatively license, on even? profile If is margin is it you some business? lower a manufacture Or

we together the and going that have, where on sure Joe, the to very we customers. IP different and dual have volumes, on to sourcing area we ramping making of in this cross-licensing and due how they players our this required due certainty well is do the expect to ramping best solution bring size common. No, we as the areas in have would make we supply. that's here have be -- as work said to sure the together our And of you customers this the

see elements as licensing. some sourcing dual cross well would as You

So this not is is in reality here. existed long no, new. this that has of devices space data a time. for And and in our This space,

new a not is this So phenomenon.

Your Joe Cowen. next with question comes Giordano from TD

join had over near couple went on talking buildings. of updated term around like But very XX you just building to is another about hear and talking curious EVs, GM of like if Terrence, kind minutes months Apologies maybe versus the plant, I through the to over to some but were late your maybe next this. they thoughts, call. like a a about hybrid XX of not

And standpoint you where like and So market? think adjust the a the adapt you to PE that what to changing do from in do do sits?

So thanks, question. Joe, for the

stable think I EVs. that they're EBIC, it's XX% my important this EV production things when the up I I hybrid opening year, in very in comments were and and But year. electric, production of think hybrids, battery automotive. about say One plug-in said you this

electrified global And production flat, powertrains the the would So are to to year, that up units. have when be XX was have XX you It's million thought close all been of have going million of XX whereas we units. million beginning would year last units, auto significantly.

of content sometimes you trends that are know this news And declining, always our And global feel I the to They're things it and Asia it So you, where in like I mentioned, see to on the it's you powertrains of important. you with electric the in around maybe see continue electrified call, you declining. the position, That's it's bumps continues. world. the with outperformance, have But not see some are they're some different world Asia. powertrain vehicles XX% very one the and read electrified of the in makes that of remind you the don't West. the in accelerate made overall,

are battery are XX%. So electrics drives hybrids China up into to we in And you up up hybrids But also that. are plug-in certainly, XX%, Asia, realize XX%, when have get hybrids, product which some benefits non-Chinese that they're West, or customers, the sets, the nice the we benefit have are in of and really it OEM our Koreans whether Japanese from that.

What do the Europe, pure Americas you moving Americas, more U.S., in XX%. see at and in you hybrids, see towards people they're

So more you and consumers up are XX% also in making hybrids choices towards see they're Europe.

to and any us. content of you good those are So see for for continue penetration increase

expect you about tell like always expect we're when plug-in to $XX. move we good full that that in $XXX. us. production into a we're you're year hybrid production and engine now, next $XX see continue battery EV $XX, all about $XXX, auto trends going we even we in XX% increase nice forward flattish And to get probably is forward. hybrid, to it, planning the on for that look a it's has [ as to be So And probably and as we electric, going certainly, So a you ] of

of a environment. global is. sure me the still [indiscernible] the that's because a always you on So you're make majority not Western just ask action very where I the keeping perspective on it, constructive just it

comes Mark Goldman question Sachs. Delaney next with from Your

their to end next to revenue the content the from increase selling and that better for customers understand I at launch corrections. on by understand year as auto vehicle inventory ability chain you cars Terrence. affected see market many there's benefit up in TE aren't just maybe theoretical growth into own has on new times, content But And in describing hybrids were following key companies are or BEVs. and delays, the the XQ supply

you do its all I'm X about of see up about content revenue automotive you of currents, when TE potential? in to and points those better show outgrowth own in targeted hoping as think think so And the understand, your think can X customer exposure you that actually to

data just a start with with driver. answer the differences. When for little talking sit the it about and mentioned vehicle Joe I prepared feel in that's autonomy, needed get additional bit And is an creates when my needed not it. important And The That an you connectivity there other with benefits Mark. confident but that's very the powertrain it's all just the the Thanks, the you powertrain in We also that driver, that content the you think is yes. you let data vehicle. in there also me content. punchline. spent comments, only about for I content -- need architecture

the the And expects. the all to they content. of other around X features elements life backbone the to that the and Basically view quarter, XXXX from those continue auto And comes and a our evolve feel the thing environment. moving I to other those. traditional is, consumer in this benefit applications, look production it, at we to know both you make with around it'll electrification this we to of look I outperformance, And but added at grew one features vehicle architecture other we declining think points X are continue on the benefit as electronification, people confident forward. call [indiscernible] proves we safety for build continue really sure the quarter

every you said, like that, things you in like TE hey, the is some world, to you we're essentially thing about car changes, time, us never the hear on great about But one platform lumps other really that. that. of will because talk of due have things The

you customers important we It's position this where never but great investor, to about really global impacting platform our hear really our as also it an that as comes talking bring I get into or us. you them And customer think is play. us technology, don't

good in get the X% about automotive. So the feel about very to continue design very X%, I feel wins and good to we we

question next with comes Your Samik JPMorgan. Chatterjee from

really I of I billion the was revenues AI year, where of the guess it's growth? What aside, record the these of confidence? this keep been growth of level. AI, go you sort where at year, have we cyclical a more going should of about to drives this sort as revenue your to that growth in are ask been aggregate thinking have of What from we do of about? ramped. markets? All cyclical flat What magnitude as recovery should $X.X of perspective think when sort sequentially confidence? on outside range that sort we revenues billion $X should how revenue some I Because company put in we kind we of be next year, think even end you track we through when sort drives fairly AI in into the look mean a

you thank Samik, the So question. for

thing, think going to and you think the be to you there the out laid we've and I you're environment. we're first other have automotive. X be should top AI, to that is planning on have points clearly X think that a flattish planning thing I We very do

do being in you're top be I really industrial masked the to going now I think lost that right On So due see on wouldn't that. destocking. segment trends our of that, to are

end, you important. that see our even very appliance will Destocking business is

business seen growth. return you've our appliance So to

cycles year the year. headwind. that some revenue big going industrial year you're there, middle million destocking little impact see the And equipment. of $XXX important sit in is on Some had this to of earlier of bit to destocking other maybe ending, it our probably has then a in that is industrial later in you that a very But pushing as the

build. So things of think types I the they're

But automotive momentum. a I in met some are are be not I of of will that content. us flattish are production the production they the And Some I know the environment. excited Content from of said those top growth flattish planning, think things earlier, about get on I them certainly content, market.

correct to complete that just didn't So thought. since I my

Your Merchant Citigroup. next from comes question Asiya with

on My question the quarter obviously, cash here. great flow, a

your to As into revenues AI us about I BI you in the Maybe And doubling and about talk talking speak you're 'XX. fiscal more ramping commitments if about now? revenues especially here CapEx than segment. we look as think to could

question. appreciate Sure. the I And

of that under at good that, at CapEx all, of modestly that different growth that's runs different times, driven about to automotive, a so have of that's in the about have assumption. outperformance is the but run well the run adoption powertrains. of talking run electronification there, times, things we'll will by Inside modeling the planning you First just -- over our supported assume just been a we've all as X% the from which the revenue content today to that rate, as largely whether roughly areas relative been various around perspective,

Some product in lines that those. had that tooling and we've in supported to has of are that CapEx place put

forward. be So going as incremental that's not pressure we move to

up out ramping and some of bit applications, are Philippines. of facility we particularly a little CapEx the coming of AI the support Asia. a to opened Now in We've

And things applications that that product Some things and other industrial because be some there that completed because rate don't that's I lines. across need the that of to some off Other in that's AI otherwise. to come materially run for we will as or But planning the portfolio. our that change areas, do pressure we CapEx we've in make see trade-offs whether in our -- support assumption anything well. other that that on on is we expansion will that's come will as incremental going

So think a I it's still for our this of process profile. but rolling within kind CapEx we us, absorb can always

Your Oppenheimer. next Christopher comes from Glynn question with

markets at ask In book or order I the under quarter insights under Solutions I industrial the Industrial positive equipment particular, just with the patterns, had still wanted destocking. particular to you to into about think generally bills. any book-to-bill

markets the high persistence pretty the where maybe at question like seems take it that visibility. So will. is other you But

presume about clearly, And nice our appliance as growth well. Thanks, business as Chris. is you well AI in the see communications, the orders right benefit on. you had industrial as of what And

and we X other So was about ending, see #X we continue back tying dynamics a talk that least is market getting to you're time seeing some. strength destocking would then back backlog. where see, the across probably When we to you point quarters look at in there and to that ago,

you what service And our Our the our service up. come backlog be is customers levels, to levels see to strong. continues

backlog So effects You see X- are I levels for?" if a time? very Why need happening we our to it Why where that out those need on those service see this I work I backlog people saying, little "Hey, do do XX-week do bit. was strong. my in to want areas something lead an

pre-Covid like So in returned levels. places have auto, our levels service above

in Sensors spaces, industrial is That factors. is the market. In those some So market. commercial that we general to piece. industrial the And equipment transportation our you pivoted then our and see of have and industrial our business industrial, that transportation

of just see global. sort And that's also pretty ongoing inside way. move I just weakness You say would

like would It partners. just OEMs strong, it both do. there a to say, little here give to distribution peel through to It's in of position, nice just that which it's that first But and you we as as general starting are I pockets is what , work [indiscernible] exact where are your look a is you move taking an good but signs boy, industrial really they can't seeing well seems stocking. come space. some with are date. longer if But will bit sign. still always sideways, you the really end we're the seeing orders areas And So it

question Odisky next Jefferies. with from comes Your Sari

to Just the conversation. going back AI

previously million $XXX in about next talked sales year. You

I you think increased that to million. $XXX just

this for us the billion an sales time give increase, update that? $X just and what's could the frame you estimate Given on

No.

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Luke from comes with question next Junk Baird. Your

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So data, clear. is I think,

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don't engineers drives centers, are that's all the magic and what content people architectural of That's our only at where real that hard occurs, are that OEMs that working helps teams where stop excel. want, because is growth. And our to design these are customers things problems consumers that really where design our that gets and it's architecture and they It electric we OEM people compete. vehicles. are And where also on that

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Langan Your Wells Fargo. next Colin question with comes from

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Stein with Your Truist William Securities. from comes next question

[indiscernible] prepared M& investments who one M&A the potential there competitors number been And and if tuck-ins disruption really us the can couple your haven't guys mentioned accelerate have for say of just in a very I'll tactics. wonder think visible. But We've he it bolt-on may or remarks, strategy you years, announced I you maybe I times. seen In that of them. even been of your was of I'd recently. remind

understanding maybe dimension for? You perhaps win that your metrics, market focus or hurdles, issue, you us help can this relates of opportunity end anything returns the to focus, technology

Heath. Thanks, Will. is This

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opportunity December, the in of we industrial synergies. is like that completed be things to or through and also to equipment tend earning in the equipment those the sales some give us acquisition value acquisition enhance business which and drive industrial so portfolio Schaffner our And the an operational things in

It be So small. have it's when we means adjacent very say always far not just bolt-on, to to us. doesn't

our will, are some on have in more there focus. we self-help more towards and But those some that internal progress margin things we as is that been little in a reflected a bit the focus seen, we businesses pivoting Now through is M&A -- little you've admittedly, businesses. certain of bit the that that across improvement focused be and as businesses

just good in it there. is and that's industrial I that we lot in pipeline, an segment. general particularly of pipeline in equipment, a about see ability feel cultivation robust uptick been the would tell more that has very you not in to time, long but very spaces spaces, industrial the activities, The in transactions the industrial the our than and a

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time, where our couple of last a is. At to value, of done we We ourselves drive we've proven in transactions the that same we we've and spot know can years. few sweet these where know

So industrial X. opportunity look the in I it part or story this as as at I but year -- bigger about I think to you'll the our us over a lot I space more today. next And think -- continue of will see be a where sits a in talk the of think

the So that. the on provide opportunity a and I to more color question appreciate little

final Shreyas Research. Wolfe with from Our question Patil comes

transportation, you're side. on the the particularly you strength in about talked Heath, profitability seeing

additional Just the improve XX, puts I restructuring takes margins savings the some think at about here. in pipeline point are coming and incremental 'XX low the are 'XX. there commercial should year in mean from trying to and next typically, in volume and transportation

what maybe So here? area? then are today of and think a we automotive to we just in a about the few finer this point puts architectures. And from as on curve. new on put the Are how the wins There margins takes ahead and actually the question you missing could that go earlier are seeing OEMs are

well? curious you're what with as just So that seeing

Yes.

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So weren't these when with architectures. the some architectures of you some we even actually evolving think to EV because jumped working about are architectural legacy changes, around on globe these them. move, they OEMs the

part is story. that our content So of

uplift hand question. that by clearly you I'll platform also the the We moves. What's see your evolutions first have going OEM team by see OEM great design content it. . through. that is that But they're certainly, are our Heath it and in seeing And our But of by it's [indiscernible] for to part over when these

Europe, of production is in into like in markets advantage terms -- places about in our think of a last where it terms moved can years of that been of Eastern of And places been and has parts I journey out Mexico fair amount production Western in the environments when a lot transportation margin -- on, Morocco of we several over have and think telco restructuring. of scale take the of I we has Asia. around self-help where activity

had has been has painless. nice cheap uplift that it we're and a not So

we we've some their The and of executed this our of patience well, to spent team appreciate do has money restructuring. as owners some

Now of some margins. in the that you reflected do see

track year, not is but X% you tightened historically that up. price prepandemic if Price kind minus a automotive. price very The have see both what I around kind much inflation material the the that closely years, particularly and on a is and don't the there's is to go Certainly, costs discipline there's our other input around minus and of we would as will there of couple tighter where last know thinking. piece we on said is there a we've years, is something headwind. -- side. price of in a X%, about that -- we And much X% And as where of anymore. normal been, think team not But it's to labor a new tailwind

put do when wasn't asking last from year to this us when all teens were in. remember, we leg The said the executed XX% up to it you the having were to really we time and are, but get but of well that, a are. same you has question put high the they team Now year you work asking, point lot to people have this

We will continue that. to evaluate

a line, even a probably is The commercial us. is transportation as transportation you on they've mentioned, for of a nice down good But incrementals that XX% your though margin held think number. you internally head I help the market, commercial remember also have their the recovery to has front. been from top

there's honestly, we've our quite exited there's as improve in opportunity to to Sensors there. And programs. And some opportunity lower-margin so business margins continue

yes, through work So suggest new math your there opportunity give contemplate to to all that targets. and the would are that up, above start us going when move XX, we everything we but you before add issuing

your appreciate do So Sri. I question,

there's Shreyas. thank for no I'd like questions, right. everybody us If All today. further Thank joining you, to

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

today, beginning participation. Thank today. Today's That on conference the the available Investor XX conference for will call XX:XX Time for you will Connectivity's July of TE for conclude at portion a.m. website. be Relations replay your Eastern

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