TE Connectivity (TEL) 30 Oct 242024 Q4 Earnings call transcript

Everyone, thank you for standing by, and welcome to the TE Connectivity Fourth Quarter and Final Year Fiscal 2024. [Operator Instructions] As a reminder, today's call is being recorded.

I'd now like to turn the call over to our host, Vice President of Investor Relations, Sujal Shah.

You may now begin.

Good morning, and thank you for joining our conference call to discuss TE Connectivity's fourth quarter and full year 2024 results and outlook for our first quarter of fiscal 2025. Chief Mitts. Terrence are Financial and today Heath Officer, me Executive Curtin; Officer, Chief With .

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

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

Solutions September, with larger Industrial and As in we you the effective a Solutions segment, X-segment the which reorganization know, businesses fiscal into adds from of Communications. structure Transportation now a start X a announced our XXXX:

into business segment Our moves is and the Data Networks. Digital renamed Industrial Data Devices and

with Automation new will the Industrial be and Appliances Connected Our and combined business Equipment, named Living. is business

As information X-segment structure, the results we of with of old financial will first reporting begin structure in in we of results first financial before the an today, be [Operator our discussed fiscal Instructions]. XXXX beginning talk recast quarter. quarter they the and being the new will issued fiscal about in end X-K our our

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

some me make joining And before today. just appreciate I us Sujal. the you, everyone always, into slides, as Thank let we And get comments.

the revenue adjusted was of by ahead our execution continued driven fourth am that segments. share For earnings our per we I that across and quarter, pleased guidance delivered solid

and cash focus generation, improvement, in growth the discussed to in earnings this share what in you that along all continues We margin which operational adjusted was Our with levers market to XXXX backdrop. key expansion consistently strong drive delivered on a teams year. throughout double-digit be with per we dynamic our margin flow strong delivered

building margins, operating double-digit points delivered few year-over-year cash on We against and growth for of environment. flattish XXX earnings at guess this. volume free fiscal our and highlight record we margin XXXX, flow. results look over And to expansion earnings per generated When a we operating I share a adjusted things basis

positioning markets defense and intelligence and alignment trends aerospace saw softness continue benefit applications. that increased portfolio momentum to outperformance data we the by industrial markets demonstrate artificial to the content the our in adoption and vehicle, renewable these And markets. of secular in electrification were and from as growth accelerated we saw the offset the energy We strategic connectivity we within the in also in broader and

we demonstrated lastly, billion to strong that return reinforces the our free Board announce our $X.X our generation And deployment $X.X to and to also share creation repurchase cash our capital approximately pleased value cash that with included disciplined strength a that billion flow authorized I'm of model. increase today a model shareholders. of program

that are them versus by do some me let me are Now have ago. to some weak some stable are that continue the gain seeing did share still markets we to let days some trends XX and and are earnings we're our call what trying some We our accelerating, and that traction, highlight market that segments. that of

essentially our in declines flat in XXXX by by Transportation global production production auto segment, was Asia growth offset In OEMs. being in with fiscal Western

well in Asia, occurring positioned. is expect continued production of global in with expect We we're auto a production XXXX. largest and revenue growth we electric decline production forward, fiscal look slight that over region which in vehicle and hybrid do we where our XX% in As in auto extremely

with continue will all across us. we improvement transportation market to content the in in In commercial growth vehicle, in cycle continue XXXX. will decline also and for benefit later the to We the potential which electronification expect some see markets, further end powertrains drive

in our we markets data AI across cloud the center, in continuing. In in Europe. our with of and million been energy which talking defense XXXX. Industrial had growth about and growth in trends particularly XXXX, sales than base. fiscal strong see we the see are weak Communications aerospace weakness segment, these will our higher We we've momentum continue customer in sales we artificial expectations, accelerating factory ongoing intelligence In $XXX for fiscal double to broad automation, that applications coupled is in segment, In and and that's expect

up performance established in fiscal in which we upon momentum set strong are for We the 'XX. 'XX, will build

sluggish through to to expect to do work them we XXXX. While we're industrial end return markets, continuing in growth

are design EV operations to Key examples investment We the continued to the expansion growth. capacity are wins AI. in larger the have engineering we growth our technology our the our skills, as making to invest to and capacity of Asian support as our the are support further well also that we of to support operations continuing of of investments ongoing some in in that region in engineering ramps expand and

we With acceleration end in coming see do these markets, and of through what growth year. an investments this as expect our we we move

EPS in pillars investing on will these to capital margin to to our long-term sales and a in beyond. value strong generation shareholders XXXX aligned and M&A fiscal drive cash further return reiterate and that creation portfolio a want bolt-on growth, while model secular and trends, cash to around opportunities. growth expansion model having I strong Executing enable margin operational is Finally, centered to levers generation expansion

for fiscal into jump with me additional our the into And and section. So quarter 'XX, more will X. as with guidance into starting and of some get then let overview, jump first Slide his details in Heath that presentation the an highlights I'll

quarterly above a quarter record on versus applications. our $X.XX was guidance XX% sales our per upside was from segment which The artificial Communications fourth and year. with $X.X was our and the earnings billion, intelligence sales X% year-over-year. of by driven were organically up share Our Adjusted expectations up was prior versus ahead higher the guidance of

XXX XX.X%, were year. up margins were basis operating they last over points adjusted and Our

flow cash million was quarter. strong $XXX and free was fourth Our very the approximately generation in

see XX.X% and generation that the Communications dollar. headwinds pleased year with $X.XX Industrial Transportation I'm over in continues the you reflected the a in from weakness Now our and our exchange mind to cash in record and were earnings free in basis full year that Adjusted was prior earnings stronger and per 'XX. was tax Equipment this quality year. $X.X me and year, and in Full XX% our currency full keep were by billion of on let they growth approximately markets end segments the $XX.X up organic of Adjusted offset $X.XX turn results margins slide. to share please sales And expanded included points with be operating XXX high headwinds. for The flow XXXX. model, our billion cash versus of

be the and of sales the as 'XX, business. expecting to in X% look quarter year-over-year, to are Now we billion, it reflects first we our $X.X up forward typical seasonality our

adjusted expect around per versus includes this rate to share and tax headwind a be $X.XX, the We $X.XX earnings year. prior

you could turn if Now X. Slide please to

there. make some that are highlighted me order the trends comments Let on

market Asia momentum weakness region, reflecting orders order continue weakness weakness in Our $X.X auto, general with in to our in with markets. in declines billion, our and in In Transportation, reflect with transport. programs in By strength global in continued over typical end Asia in orders seasonality, sequential West. markets. commercial the ongoing AI patterns industrial order stability auto growth reflect reflect patterns In production, ongoing Western along were

XXXX Communications increased in automation, and the our as year-over-year, programs. trends and and in happening supports And they in we TE automation the our Industrial strong in last segment, growth strong we applications an both building we're softness XX% growth from intelligence to growth artificial particularly opportunity Europe. nearly innovation see had In levels order that addition the and quarter. continue segment, expected the And the industry. order these came is in to expecting for in exciting across This fiscal factory are our we

outperformance generate into Now backdrop with growth let segment with to get and start auto orders, is our segment ability The year. all the double-digit And against offset points continued declined by market, I'll over X% in X. a on the West. the results, in a decline region of Transportation driven was of declines production fourth trend growth production Slide mid-single-digit this auto our by as frankly, Asia, that X% by quarter. business quite organically in the versus organic seeing XXX global that Highlighting our basis been that we've me about

EV our world. position to connectivity over very positioned, Asia, continue Asia. in X-point I remind position and everybody dynamics automotive in occurs at. across and emphasize expect all range HEV Asia and vehicles -- in and car of by regions production by to do pace in very supported further is As that HEVs well we want the We electric long the in our adoption of and are to continue content we different powertrains, they've in everyone to hybrid global that term. be X- production and This data benefit the the leading EVs sales strong growth different and electronification are do expect to knows, been XX% and where

in only up position in in fact production Asia proven we where differentiated was grew year sales this mid-single is an that mid-teens by environment Our the regional digits.

by first business, to be about these the we've We quarter business. XXXX. decline commercial business completed continued exits we've well the industrial this X% as do driven down by as you do Turning cycle driven in and our see to transportation was primarily in that We the sequentially automation potential with organic market expect this Europe. efforts year. improvement about. throughout be applications in the decline, to In in sales again to as did be to the we a talked We Sensors weakness portfolio weakness that talked move in expect

margins segment, the For Transportation fourth quarter. were adjusted operating in XX.X% the

we strong year to performance. year, year-over-year our operating up adjusted expect points delivered first margins driven basis quarter and similar were to 'XX by fiscal we full levels. the the And XXX be For these margins, XX% operational

So Solutions please turn to let and Slide get me the Industrial into segments. X,

and our driven were organically, both markets, XX% we as business, were commercial by of to up see strength as favorable the XX% well can As up Americas growth these in slide, markets. on driven recovery. see ongoing demand our sales AD&M In you supply by sales continue Energy the in and trends In organically, the Europe. chain in aerospace defense

well that as renewables support from to We increased made investments momentum benefit being as generation are continue power needs. in to

business in organically. declined declined Medical Industrial Equipment the slightly the quarter business XX% and Our

medical full aerospace and and For in saw the defense, we year, the energy businesses. growth

the On XX.X%, was levels were given the line in margin and segment our expectations volume current business front, mix. Industrial with margins and this

on and So segment the Slide me X. the this is segment, with discussion wrap let Communications up

wins organically, design Data reflecting Our accelerating and grew momentum. are and Devices our business XX%

double from came XXXX and Our level we in AI broad sales revenue of a in AI in to fiscal this across million XXXX, wins base fiscal at applications design expect from from customers. $XXX

business saw appliance the strength operating our as Our well again, by we this margins the Americas had and driven quarter both in grew second really as double adjusted Asia. [indiscernible], segment in The digits was that last year, over of on XX.X%, volume and show a and that operating segment. higher by was this did had strong the improvement the with leverage expectations. on aligned that driven significant we Margins was

me it summary, more who So on expectations going will as to let turn details with well get as into forward. the Heath, our over financials that

Thank morning, you, good and Terrence, everyone.

Terrence of our financials, get reiterate to earlier. I something Before details that the I want into said

dealing dynamic environment. market We a are with

delivered free year and and our this improving 'XX. we flow record that on So been earnings. has focus margin, EPS margins am cash I in past fiscal pleased

other adjusted XX.X%. $X million For charges was margin GAAP and was $XXX $XX income of operating million the quarter, an of million operating charges. $XXX included income with million and acquisition-related adjusted and restructuring operating of

charges $XXX $XXX efforts, the For be restructuring million, charges 'XX level. in optimization expect I or were at million continuing below year, and fiscal full footprint restructuring to reflecting the

quarter was the for valuation EPS tax the was of tax charge allowance included a increase and EPS related GAAP and in assets. the deferred $X.XX Adjusted $X.XX to $X.XX for

Additionally, we had restructuring and acquisition $X.XX. other charges of

rate for as year, tax was XX%, adjusted expected. the full the For the which effective quarter fourth was approximately we and

effective to to being XXXX adjusted related move in of increase be into full we year in Pillar versus prior approximately the XX% range. we The II fiscal our primarily minimum XX% XX% the the implementation. tax 'XX, to rate tax with impact the QX the global year expect As is

the you was below to mid-teens, expect cash mid-teens our 'XX rate. rate our in cash fiscal the our And adjusted to tax term. in tax Importantly, significantly effective can continue rate longer stay tax

offset Communications by full Now turning were and X flat segments, billion was Transportation Slide on information operating for the to on organic margins did have organic the which basis margin 'XX expanded performance. by basis, segments by year-over-year XXX Fiscal the expansion for year XX% of for basis were in an Adjusted sales level, We additional Industrial growth XXX $XX.X operating in adjusted segment. in in we the XXX XXXX. basis with Transportation driven Communications, of segment operational strong points points roughly At a in margins and points year performance. full margins nearly resulting both XX.X%

earnings up environment, of. And currency year-over-year, included exchange Adjusted tax margin XX% growth given share per the EPS double-digit $X.XX were and flattish higher headwinds from very this is environment of rate. by driven I'm $X.XX, market and a in proud something expansion

Turning to cash.

was new up free As $X.X this pleased you $X.X billion share we fiscal of generated may fiscal to to year-over-year. $XXX approximately cash flow 'XX. exceeded record in record And in of recall, XX% we billion million which by a our 'XX, I'm

as net earnings. the quality to percentage was of remain we look in as teens And income cash high free flow and cash expect flow adjusted sales, of free above conversion demonstrating the our forward, XXX%. we reflects conversion a Our XXX% to high

'XX, roughly returned fiscal strategy. shareholders In $X.X share million, bolt-on we we buybacks deployed $XXX our dividends, approximately and with acquisition through aligned and to billion

uses balance generation sheet optionality more and healthy cash capital. us of Our gives with

today, strong have will saw as and which of additional we a shareholders, to billion to return optionality. authorization, capital our We supports announced $X.X continue repurchase an you

opportunities. pursue valuations. on a deal also in than have so more bolt-on opportunities inorganic at bullish look our past attractive the a are will more to I'm we seeing more And acquisition years, We seen few bit favorable environment we

questions, to we to 'XX reinforce turn in let performance over our that XXXX. to upon performance deliver build even me we stronger in financial expect Before

We trends are our we to expecting secular growth year, this are to accelerate a return through with and fiscal the in as investments expected move markets year.

expect free generation. margin we cash EPS addition, and flow along deliver with expansion In to strong

questions. Now with that, to open up it let's

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

Your Instructions] [Operator question comes ISI Evercore. Amit from first Daryanani from

and on the you that There's the forward. perhaps just happening expand of unfolding been around of more some you hoping can discussion I'm going here. Terrence, see a lot AI what's opportunity shifts

getting to any have would have [ perspective. about or recent And architectural can sooner? of TE? customer to term? hear team What of both perhaps you about billion diversity Is this longer we love this the going some you has sort So discussion, opportunity here? do perhaps how think into your changes impact of And the should happen leave AI that talked dollar bigger to ]

speed the efficiency time, that excellent Thanks, number latency engineering a Amit. lower which for helping you customers need provide solve power It's talk obviously, needed, heard us which And solve. our we this is well, trend problems demands about the great a of it's tough and really what of our as with same all quarters, we also engineering about from higher really at product. cloud that's and

So something like, engineering we stickiness. that it is that

ago. these to the about really the from you just And at baseline up really expected the let's growth increase penetration really is when think them at as can on the our going. talked trend, their is have customers that cloud and years a look built as that XX% that's spending well to we you where our do CapEx be our we I what's few that wins look on is from programs we're design and see what we reports, And cloud face did again. when the continues it, from working and designs with funding position we

at we face and few million about, to to momentum we with let's started said momentum, $XXX you it, a the look we million. years when So get back, that the talk $XXX

at $XXX year the million. ended we Now

being actually this accelerated. for continue customers had quarter almost just our out. face you up patterns getting let's So the were pushed in and order orders see XX%. in that segment pulling in are Communications our be to really momentum, to where we things up more our asking And everything it, we XXX% quarter, last than increased do see that And in

talk So today to do $XXX expect we of doubling still our million about million prepared the next we comments, did $XXX year. in the

we if So to really execute to continue right, programs. slides to I closer on $X about, the to going more we going good. think momentum than the anything, slide that be feels left the billion in us to on it's talked And the as it's these it's

it thing had And cloud. players I in as other architecture who play are life, talk chips thing one when to customers companies. are the as have silicon The just we is important didn't broad-based, that make people important other about are well. how the that's they are, they like to acceleration pretty hyperscalers, similar comes in guess to other I our to the semi very actually make the the the and that ecosystem come other that you the to that solutions the It's

not across And that's customer, So proud has that. what across one I what we the do have concentrated and team think engagement do it's of really on it's done. the I'm really ecosystem,

We've to at really I what us see be going increase we've growth ramps. we out as it's the clearly to for to our look in revenue biggest sure these I next driver you. support make this for capacity prepared think been to going laid And area. with as the the skills continue engineering to around 'XX in have said comments, investing, year, you probably So you're

the from line of Bank Wamsi comes question of from America. Next Mohan

outgrowth outgrowth. of from unpack That Terrence, I Asia. sustaining I comment region? was 'XX closer trends in you that those of coming is hoping do wondering, And XX was see versus that in in sounded how your to maybe as much increased electronification the on mix you content points well? could EV fiscal

things. of couple Yes. A

vehicles here also EVs the the you it's Asia, while was vast much at sideways first production, Asia is, Wamsi, car West -- very largest perspective. made we year, being revenue Asia, and region. million and of majority was X more And off, today And look think look were year. are last sit where made. slightly at important digits. there the it Asia a about is last if from overall were all you made It's production electric mid-single in when They our up just you what's think I when down --

up was digit. mid-double revenue Our

getting that outperformance. any architecture the content as well A the as well the put is evolve. really So connectivity you the as It in into that's data the EV them, momentum. continue at vehicles. nice to in Certainly, Chinese data as software vehicle look vehicle, also car Asian needs more it's

So EV in a content get and everything we the had outperformance driven you're do X we expect going all is both as EV from similar that million the that units going And year, Asia, very feel we by well units. be that. mainly production probably for growth That's as this powertrains. we well to to see continue to positioned across around

Steven Question of comes Advisors. Fox from Fox

us the basis this maybe it maybe on I bit how margin to how if compares by pro could the new growth to terms switching what little about a a year and X just was think to segments, reset segments expansion forma you're help wondering in reported? maybe that you just on of you

Yes. of A things. couple

premade X-K in data to as all give through going later an will, the quarter, We his said Steve. we're Sujal remarks, in you

about good when you this get baseline combining be a year, when IS you do sit when see and couple look back of growth, So think And it's that at CS today a until I out. I there we you that together. will the think think really segment things. the and you the

continue feel and going Auto, to production though we also auto can question commercial this we X% softness, down, just into growth weak it to business, impacting some And been as to equipment, do going we with look saw been year, of be year. markets segment, sensors real slightly areas Communications AD&M, X% go and we're production. the next industrial have that. I think where as the think drive will growth us. good in we outperformance be over Even is like energy in our we the that transportation seen have to the ahead is The the industrial we've -- we just going places where and what be whether

year. 'XX. go that year. we does will a through becomes do we about and, comment relieve We think side. on thinking the don't do there that's to When through you as you headwind to that But expect the I growth yes, And margin be go as 'XX if in how of that We lesser the into know a should want improve growth. happen Heath,

we Sure. pro will here change -- your Steve, I'd say update as some in from quarter not can Transportation so forma put backward all. modeling. both Sujal there's But and at later Terrence looking the commented, in out you much have

terms the the stands. that. to So then your we have probably other high kind of you say as of teens Transportation range. And in would own segments pretty But and together, you close X finished that can segment Industrial add math know what new XX% that XXXX get it's doing fair our in the in

in we're midterm. versus for As the company closer the we there, that And front, the And comfortable move goal making. the new that growth the opportunities XX% total we the with some with is or in 'XX through the 'XX move feel the being for moving be as over a in to the just unchanged are look better Transportation is at outlined segment Industrial there the Transportation opportunity we we'll investments and at but with biggest We see 'XX year. what improvement are with as Industrial into level then XX% we move where the to Transportation segment. Terrence margin segment of is XX% us them on forward,

Industrial in where that that FY working good going going to we're The about So biggest see and feel to go. 'XX. in you'll is move be we're

Scott of Research. Melius Your from comes next question Davis

'XX bit, It helpful. snapback toughest there through right of automation And that managing wanted margins would your in just a stabilizes? one a any Is kind [indiscernible]. factory to on side. year little be get pretty to visibility Industrial on I a that tough as business on now. to Congrats seems turn when be

as that, see commented, just say factory for space, a automation it's building Scott, really area we we I sure automation. hear thought this where year. ways, it, question. it we recovery expected have of seeing the also a in many and have factory is areas would And to bit where would the little an we Thanks, No. around the nice we the position. make -- what in discrete weakness, very have you we're It's would

the We while weaker. would thing slight it's sure we bottom, have say say want around to do one Asia clear. I seen would a it's [indiscernible]. that, where And it feel And that's I bouncing feels make the do Europe improvement. stable. little is I got Americas in a

they So have. we're still they do with there regional think I off some inventory do as feel is of customers, I what dealing of a bit Scott. little working -- of with some our mixes well, are

we're is calendar bit do destocking we in see to there. out a improvement. have little probably going that get there think 'XX So of to I into our until

the we still and headwind been big It's year. but around a we in it's little bounce sort a growth with has it right think we there bottom the some now, think the bit I more time. do And this had of out improve, trends need of will absorbed But areas. other

from from comes Goldman Delaney Mark Sachs. Question

to sustain. the think something the success think of content to the about low company. and to you about on Tesla is architecture announcement over their as company can is you week this thoughts content the term, growth from longer X plan connector voltage growth able simplify implications spoke you X to auto with having earlier the any You points you hoping for and But I'm the look outgrowth be your share around may

go that with Thanks, architecture to customers go we excited there challenges Mark. do an in how just do the you, how company XX-volt, the when but messing we with would to to go compute and work car And because like the into that And trying XX-volt go gets distributed and individual quite And Sure. I tell say, because zonal are we play architecture, comment us you're we I every compute. that. don't compute on it's with or announcement everyone, world. do can be to real from from evolving central whether you

do going, Tesla that on. architecture trying you these you improve may which across to in each assembly And nothing on job always They that with to also vehicle. changes And things those one does happen solve electric efficiency, have a are are all be an how certainly of great do powertrains.

So cases, complicated miniature-sized, in get typically wires, you're which things to in using interconnects They because you're challenges from combining especially the XX process. create more you're together. the thinner more get these volt, assembly when going also typically XX

what to for the it problems, the and as word engineering get these problems occurs more And versus complex increases electrification. And you content typically when us. electronification that's we use

to even As X, on change across realize, electrification important a talk to have powertrain is you're the when architecture where any electronification about an as you us. basically car, more that trying the just hang have in X to happens improve you're we And of creates to trying electronics that, that we as and everything. content opportunity for

with And So every next-gen excited we're that the we're work company those they on architectures. in world as fortunate changes about. of types we these can work car

from comes question Oppenheimer. Christopher next from Your Glynn

the repurchase. a Heath, billion I capital bit $X.X noting allocation. you about little was talked

I think it's a than little normal. bigger

adaptations to to back I So go suggest capital that wanted Does discussion. for just that any strategy? your

we've Thanks, to to question where M&A into front when stronger with pipeline generating us and deals terms optionality and that And of of and give need a the make be times creation a part word options. with positioned us, owners Chris, word be but think in amount in do our of used today this that's we as was for our we announcement couple we've a through that to cash appreciate this. No, company and got it, and resonated do went us we've opportunities. that the sense and valuations I on the Board seems to we I consideration been of value the flow sat follow-up taking have of

that, up cash no and flow our an ample balance here. we on intention of said have Having still sheet have we piling excess

strategy. So we not never have and our that's

to cash as will opportunity deploy to to our which capital the our an do us gives it in earnings share with and what increases. dividend we owners addition increase So buyback via flow

another of it's continue in just So But next our it in terms doing. couple I utilize balance years the bit will out more suspect maybe balanced stay over ability little to with generate we're cash bullishness sheet our just what flow, no to that, take a mechanism. us change that and about of authorization.

comes from Luke next from question Your Junk Baird.

great to in TE's get positioning be perspective automotive updated would your Terrence, China. on

guess on just achievements Asia about Specifically overall you've very a current about China thinking just been underpinning turning new this with to might into a next customers, some I zoom what's as and that there. year on lot of especially your strong to maybe But talked and morning. and I year. the in leverage we want key seemingly locals positioning mean customers move I'm what

are a local in the especially And competitive from then China? simultaneously standpoint, players incursions making there, seeing market in you incremental into any the changes

Luke. part half made first when in about About China of assume, off, vehicles Thanks, are that. a Asia's fair. you very plays And China. No, big Asia, have to we in talk

China. made the important auto of about the those And And million, alone. XX world production, our of is us. we revenue of made is while So cars half automotive in And in talk of there's when always and XX very in about China million are $X for you those world, those are think XX billion China about million position Asia. a global

outperformance waiting, this same to with OEMs. ours things I able the multinationals, Asia, in mentioned would if assume that has the we content OEM, I relate play a outperformance type trends of on of the local just always of that growth the about China. think is And one the with that with not talk we outperformance we be you can growth type not weren't And about, strength every drive been we of because

secret. share it's a China not inverted. It's Multinationals are losing in and

proves a had So we've we're OEMs that winning done we're and with to Today think multinationals prepared have it's I great the of have we're And my something factory OEMs, China job growth automotive and we X/X mentioned winning and remarks, I have sixth sort similar with are actually that our something heavily -- has used that the Chinese And as and we've our it's to between growth just the the is invested team logos share have. the we market support X/X our in. actually X/X two. share opening of X/X. in everybody. in that local Chinese multinationals And

against competitors expand here. So competitors very that important. local time, is for well have new there as But are companies that traditional important. that competed competitors is with local the we're Chinese play Western they continuing to And and you quality, competitors we our engineers, as there. competitors. other Because It Competitively, is primarily some cover are served that we've that still resources, there also which is local everything, not locally, some are capacity. Japanese cost that

well. with winning sure to against We have make them -- we're as

to second driven And the So we as points is half, that It I content going can of EV. we outperformance our feel volume good about X in help up 'XX, the we driver us be Asia really, the also Asia. at position in our Asia be and outperformance pick is be be by Western driver the world. very that outperformance going hope important. will we of half, well. position. going look And second But is production It's had the these then as trends to expect on saw our something the we of content to the

Your next Saree from Jefferies. question comes from Boroditsky

still needed XX% going there I looking you for Communication given to incremental new growth the think growth are XX% you're expected for specifically? about? should on just strong that segments. know to in investments we that Are some But margin XXXX,

Sure. I'll that. take

that front would with on that we're of type that space to making the increase both for to are of production are expect seeing, type that we you investments handle capital the engineering capacity there uplift in growth as as we're well investments As making. that

our XXXX. been those are underway already run embedded our Now some rate and those of for have in

in expect perspective, of So -- uptick it's I'm as continue for we underway should not these us here that you as new out that because on level, into a we the decent forward, . But segment can XX% to. programs From you we a to think a some which from in incremental to flow-through number. have And while. to we I we the the we report dial been a tighter. asking, you is said come time give color going were 'XX frame, suggest back an think a segments. little a more But be when be that, little first will probably when need having I go move to at January massive which

other AI doing cost some segment. side. But actions rest also in that's the not and that that of from That's coming we're just coming things this from

in you you. think for and up dialed tighten that ballpark, it I So can somewhere we'll be in

Your Spak of UBS. Joe next question from comes

expect and a next be Heath, of via this cash then of flow materialize, doesn't whether you conversion of M&A on CapEx the And we follow free that if up was year the us be if plans about similar. to distributed question, could flow cash I just free could just like should for converted give color XXX% free and flow you over earlier cash little still bit buyback? wondering dividends XXX% pipeline to on new year.

couple things there. a Joe, of

from under the I First, some I a this revenue growth came assume but but from $XXX X% 'XX to bring -- modeling versus a need sound we the CapEx and is of and things. little elements modeling. CapEx expect of AI program broken about and I we our 'XX Most to like be as We roughly capacity I probably always higher. year, online that would may perspective think there's all record, towards still timing in that. to support that know do a million

feels to nothing it's looking model, we'll ballpark. you, but dial a to kind your relative it update CapEx of continue outsized in you're And in from that perspective. like So to if that

benefited a a largely capital of that a go can a cash in we're From that environment. to flat, growth the from and is certainly expect in environment from in things perspective, widgets working the flat we that we And when flat after would number fact able that you a manner conversion growth making you're have been we've like inventory aggressively. pretty perspective manage conversion

other plan a more that's over little the coming supply our the the the more able things chain recovered years, in of to in swings X as one we've a as or world better suppliers favor well been middle to, and trust COVID past the sit order in the The perspective of have worked as we're finally able bit patterns is out is everything. our do from of is just from thing our we customers as X

'XX, expecting and we expecting in are our into as grow, volumes move are Now to be we up to we 'XX.

And bit as as well have that will so on working of on pressure pretty of natural impact inventory. a a little on a both receivables capital,

to that I think I to as math continue that stay feel But that you going update don't not going we're XXX%. I But again. So be to be -- XXX% And and we're still I question tell would the moves we'll tuned. over that forward. appreciate confident at

question Your comes TD from from next Cowen. Joe Giordano

facilities nationwide that but happening auto Germany strikes. appreciate I of in lot a this you're in of is kind real at announcements joining getting workers time, about

in auto the about feel guidance situation of and when you're you so [indiscernible] next your And at? kind think how how you that specifically quarter, do dialing

through we what the know And have when to we year-on-year. that everything about quarter in down one quarter, similar many going our units customers first fourth auto unique guidance. And Joe, is we production do do it be guide, thing our things. -- certainly, are in global business we to of was in think we when Well, we expect

do I we and going -- think you're the that some weakness seeing West, the things of going you've be have to talked in about. are to So

the But next we be year. look of the Asia as and to driver is at then real in going production growth

the to is mid-single And a that. big X, talked quarter we in decline year, in chunk next the Europe going certainly, of overall expect be we slightly. So digits do to global down production be auto production,

Next Wells question Colin Fargo. comes Langan from from

This the filling margins for 'XX? Can business just impact Transportation how and focus on in color on is [ year I just Colin. wanted you place market. offer ] vehicle full your to will the more Kosas segment commercial some

of bit talk let XXX ag certainly first a let see overall construction been than of little the nice you heavy globally team we've me And look grown basis little weakened. our decline. bit has What's When and margins. a then the talk and which rates, market Well, impact the sort off, do a an better truck that also our market, about includes points about is Heath experienced that. there, has inventory, financing probably I'll of you

in cycle, here, which as will common the negative in So environment. that I a are that some 'XX emissions don't But later some year. front of world think we're parts as of are on you there these are this and we get it? Heath, spark about are we outperformance And things work think improve do could through the we certain the next why talk in side that margin demand

that commercial question because Well, profitable it's within can a the TE impact is pretty segment and the that the business there, we've business and obviously. transportation segment for good public margins a sometimes for mix very our been segment Transportation

pressure put that softness seeing margins. we're on does the Now, the

However, it put pressure as on the margins in well. XXXX

rate. So run of in our it's kind

way better are we head margins their into our assumptions a work holding some the move XX% market as improve are our we seeing at things or Transportation commercial our and expect transportation we -- on and we do big from XX, As through demand perspective, upon while contingent business to uptick. year not not

So and segment. our the that's the auto parts come able business well been has of handle headwinds other to has performed very out of

Sheerin next Your from Matt from question comes Stifel.

going ] XXXX? Victor that And to datacom tracking? I traditional been applications [ color is recovery This Data you into for on some Sheerin. Matt the do is ex opportunity. your get was Devices how for AI the view on business hoping business and How

Sure.

about we And talk into me AI. Let that. get a lot do

returning see take parse But it, we and off, we're and always is seeing actually true see parse being cloud. probably do element First had outside dollars a after of we difficult really versus as next that when AI, that try went elsewhere. a do growth. to year nothing -- cloud invested being We to you the it to between growth shift AI AI mid-single-digit we to

way is nice at I cloud to spend we then AI that's see into continues next do recovering largely in to cloud be we But next outside play at And coming to I the nice look year. it's networks. Enterprise telecom exceed look don't sideways. it it's actually ] programs the So This back going year. [ think more would we up. as of see that do

Stein next from Truist Securities. comes from Your William question

it's then things, comment results can and in on mentioned. a exits that little you growth bit is orders two hoping And lumpiness, I despite surprising you also, on decline the product next [indiscernible] been think, elaborate investors, Perhaps you just the strong first, comment but about if comms this the year. anticipated I'm sequential could the

us this maybe just I talked about more think in slides, the give color. but bit a in sensors, you

Will. Yes, sure, Yes.

have So orders first realize, you decline agreements when to I our XXX% be XX% upon it. lumpy based on they're And in customers. nailed last in the the Well, upon think you in, grew with based quarter D&D, sequential going programs to are off, when year-on-year. orders quarter, this we get our to

to going you're And continue that to see so I think lumpiness.

in we collectively keep $X combined. D&D, to of the think past I you punchline the real had is quarters in of front X orders in billion

non-AI another, careful cloud we're really doubling what's one supports accumulative. we gave in what very And AI I seeing about, the taking trends be revenue really the So our would strong. and of just the you And in guidance even versus I that's that trends. cloud quarter talked

we've get that we've ourselves important end areas year. in sensors we're that doing challenged you And medical vehicle, to XXXX, automotive, coming sensors. years are And program. ourselves to to we've say, the been It in you look, it to put talking this been can exits really been it's winning of switch our exits. they're sure as about will it that headwind the me to we basically In was to way and next doing has we -- million And coming reposition factory to X markets. $XX XX/XX and back in automation. markets really heavy be be few that about doing in was for Sensors, be This focused we work, us was done. make up, had. been those But In as pruning question a X that it a they'll second let year

Research. Wolfe Your next Shreyas question from Patil comes from

little underlying that some the probably Industrial your expand to that But is close if goal is adjust and to bit. It Heath, can margin curious to earlier just cyclical get you a operating little that the level pretty a we out on you would on mentioned Commercial. Wondering to the that in if margins. of appear XX% were challenges thoughts.

with AI, on what to million then of around somewhere orders where around probably the appears revenue year $XXX straight And million just close guidance to be for $XXX interpret to $XXX next how to quarters million are X quarter. per

the I'll margin take question. Yes.

guidance and provide a volatility continue formal margins was that either our already terms at in haven't are, out margin light feel about to with about quarter segment is market gone that. trying what in earlier transportation in of which do little running of that. are structure, of XX% particularly of softness We bit front. XX%. where a we on we at little that a direction But good side was always But new if the There's commercial I the on of transportation the bit think will color that you

some -- that And the us in over we've think TE, with given to the the us XX%. opportunities that things of traditional it's we as well of now up our over combines be to high as growth the for total, As Industrial XX%, at rate obviously blended next cost teens. which put segment a provide some the somewhere segment, opportunity. and Industrial to about that's together, which couple going would in years does new on get Communications done side segments that It both

more comfort So not intended thing were entirely going to a It be comments around. and this 'XX. versus we was see where be meant to my XXXX getting

you And to formula help This to year, well. do years But volume get the want XX%. going We then we that in see to ended that closer XX%. is to as to... next couple Terrence, close up over of

$X business enterprise. just by in AI, about orders there while just Shreyas, the this talk billion, are the the are clarify, of AI other Yes. thing, we one of parts to driven non-cloud the increases

do between momentum the I order only there the we all say just is a I that it. to It's would have is that AI there support doubling. difference So versus think is level

just 'XX 'XX. into those put as So and you think I as do get you together,

Markets. Comes Hardwick Freedom . Guy from from Capital

for I appreciate guidance the gave you transportation.

you will said to will FY -- think be it it be I level. 'XX equivalent for QX

little a you're was So of to the at Transportation go that's now, XX% about much are investment. that's XX%, QX, bit talking given XX% too you close kind But question, kind incrementals. But consensus given it's high equivalent a due it at not and can below peak But begs I expectations, to how but around levels. it understand of margin much.

for and kind the production the -- yet, outlook the dynamics year, the next and what's in don't mix? you what exits of given So and kind commercial for margin Sensors but specific the of said for guidance want next maybe a then what for getting about are know year Transportation I to recovery for you transportation, back-end give business through restructuring

timing maybe we noise. about the couple over in of have Well, the I not where can think and moving fourth quarters. we of It investments be thought could in XX.X% We've there did So this some we given would quarters quarter, right? and nailed quarter. had be in the In you change Guy, that worried quarter, some things mix. all a were various have a layered XX%, did we heightened there. also I'm that parts

get happen. looking quarter not segment. on we our but just I FY foresight 'XX QX up that don't our things So have one into that the with hung particularly these for

XX%, growth that. business would In natural that drive to of incrementals the past in that moving the terms suggest that would

a of sensors. Now auto the on line we've volume has in ton so we've the transportation in growth growth out by not have both we're that and pressures had been and forth seen offset seen -- we commercial because market top

now to expect do transportation product expect as business sensors sensors won't -- those we commercial exits not growth both it's in necessarily -- do frame of Now the time second we in of terms But the half improve for probably in as it FY we're and return through of when a albeit continue to could right the the to the that year. the year, 'XX. we or happen, calling move

some been in call returns about a number there we're business we on support to good the When not I that able auto feel head we've you'll the do with that see incrementals, hold business, And there. but around. conjunction growth or our ready where to think put to strong out

want there's questions, right. All this further If you, no just to thank I for Guy. joining morning. Thank everybody call our

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

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