TE Connectivity Ltd.
) reported second-quarter fiscal 2014 (ended Mar 28, 2014)
pro-forma earnings of 95 cents a share, which surpassed the Zacks
Consensus Estimate of 91 cents. The reported figure was also up
25% from 76 cents a share earned in the prior-year quarter.
The company reported GAAP earnings of 87 cents per share,
which reflected a year-over-year increase of 32%.
The continued strength in transportation and industrial
markets were the primary growth drivers. The company also reaped
gains from its diligent operational execution.
Total revenue in the quarter increased 5.1% year over year to
$3431 million. The company's organic revenues grew 6% in the
quarter. Revenues rose on the back of strength in most of the end
markets including automotive, industrial transportation,
aerospace, oil and gas, industrial equipment, appliances and
broadband networks. However, the reported figure fell short of
the Zacks Consensus Estimate of $3451 million.
Revenues in the
segment rose 13.4% year over year to $1571 million. The segment's
operating margin increased to 22.1% from 17.4% in the prior-year
Revenues in the
segment were up 4.1% to $789 million. The segment reported an
operating margin of 13.4%, marking an increase from the previous
year's margin of 10.4%.
revenues declined 5.1% year over year to $688 million. However,
operating margin for the quarter increased to 3.3% from 2.6% in
the past year.
revenues declined 3.5% year over year to $383 million. The
operating margin for the segment increased to 8.9% from 5.0% in
the previous year.
Gross margin in the quarter increased to 34.2% from 32.2% in
the prior-year quarter. The operating margin also increased to
14.9% from 11.0% in the year-ago quarter. The increase in
operating margin was attributable to lower selling, general and
administrative expenses as well as reduction in restructuring and
Cash Flow and Balance Sheet
TE Connectivity exitedthe quarter with cash and cash
equivalents of $1429 million, up from $1403 million as on Sep 27,
Net cash from operating activities for the quarter was $449
million, up from $445 million in the last year.
Capital expenditure for the 6 months period was $168 million
while the company paid $102 million in dividends.
The company's free cash flow for quarter came in at $273
million against $353 million as on Mar 29, 2013.
In the quarter, the company got the necessary approvals to
increase the annual dividend by 16% to $1.16 per share.
TE Connectivity acquired leading offshore oil and gas industry
solutions provider, SEACON Group in an all-cash deal worth $490
million in the quarter. The acquisition of SEACON Group extends
TE Connectivity's connectivity solutions to the oil and gas
sector, which has high growth potential. The acquisition will
enhance its connectivity solutions business, especially for the
applications in harsh environment.
Along with the earnings release, TE Connectivity provided
guidance for the third quarter and fiscal 2014.
The company expects third-quarter revenues of $3.54-$3.64
billion and adjusted earnings per share of 96 cents to $1.00. The
company expects GAAP earnings to be in the range of 93-97 cents
per share that include restructuring charges worth 2 cents and
acquisition costs of 1 cent.
For fiscal 2014, the company anticipates revenues of
$13.8-$14.1 billion and adjusted earnings per share of
$3.72-$3.84. The company expects GAAP earnings for the year to be
in the range of $3.62 to $3.74 per share, restructuring charges
of 7 cents and acquisition costs of 2 cents in the year.
TE Connectivity currently has a Zacks Rank #2 (Buy). Some
other stocks that look promising in the industry include
Ballard Power Systems Inc.
). All of these have the same Zacks Rank as TE Connectivity.
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