TE Connectivity (TEL) reported impressive financial performance for the second quarter of fiscal 2024, primarily driven by a significant expansion in margins and exceptional cash flow generation.
The company’s net sales aligned with guidance, experiencing a 5% decrease year-over-year and a 3% organic decline. However, there was a 4% sequential growth on a reported basis and a 3% organic sequential increase.
GAAP diluted earnings per share from continuing operations surpassed guidance, reaching $1.86, marking a 13% year-over-year increase. Orders witnessed a 6% sequential growth, with positive contributions from all segments.
TE Connectivity achieved operating margins of 17.4% and adjusted operating margins of 18.5%, reflecting a notable 250 basis point improvement year-over-year, driven by robust operational performance.
The company generated a record cash flow during the first half of the fiscal year, with cash from operating activities increasing by 18% year-over-year and free cash flow escalating by 32% year-over-year. TE Connectivity deployed over $1.5 billion in capital year-to-date, with approximately $1.2 billion returned to shareholders and $350 million allocated to the bolt-on acquisition of Schaffner.
Furthermore, the company issued its Connecting Our World report, emphasizing a 72% reduction in Scope 1 and 2 greenhouse gas emissions over the past three years. TE Connectivity also established Scope 3 reduction targets that were validated by the Science Based Targets initiative.
For the third quarter of fiscal 2024, the company anticipates net sales of approximately $4.0 billion and GAAP EPS from continuing operations of roughly $1.71, representing a 2% year-over-year increase. The adjusted EPS is expected to be $1.85, reflecting a 5% year-over-year growth. The third-quarter guidance incorporates a $0.15 year-over-year headwind resulting from tax and currency exchange rate fluctuations.
