Tyco Electronics reports strong Q1, raises outlook

Fiscal first quarter results include net sales of $3.2 billion, up 11 percent year-over-year.

SCHAFFHAUSEN, Switzerland -- Tyco Electronics Ltd. (NYSE: TEL) reported results for the fiscal first quarter ended Dec. 24, 2010. The company reported a net sales increase of 11 percent year-over-year, and 2 percent sequentially, to $3.2 billion.

Earnings Per Share from Continuing Operations (GAAP EPS) were $0.60 for the quarter, compared to $0.37 in the prior-year period. Included in the GAAP EPS were $0.13 per share of ADC acquisition-related charges and $0.01 per share of restructuring charges. This compares to $0.10 per share of restructuring charges in the prior-year quarter. Adjusted EPS were $0.73 in the quarter, up 55 percent compared to $0.47 in the prior-year quarter. In the fiscal first quarter, the acquisition of ADC contributed $51 million of revenues and had no impact on adjusted EPS.

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"We are off to a good start to our fiscal year with strong first quarter results and the completion of the acquisition of ADC in December," said Tyco Electronics Chief Executive Officer Tom Lynch. "Sales were up 11 percent and adjusted EPS of $0.73 were up 55 percent over the prior year. Orders grew 7 percent in the quarter and our book-to-bill ratio was 1.03, excluding our SubCom business, reflecting strength across most of our end markets. We are excited about completing the acquisition of ADC, which positions TE as a world leader in the rapidly expanding broadband connectivity market."

RAISING 2011 OUTLOOK

"For the full year, we expect revenue growth of 15 to 18 percent and adjusted EPS growth of 20 to 26 percent," Lynch said. "The sales growth reflects approximately $1 billion related to the ADC acquisition and the continued momentum we expect in the majority of the end markets we serve, especially automotive, energy, and telecom. We have increased our full year adjusted EPS outlook to reflect the accretion of the ADC acquisition and our strong first quarter performance."

For the second quarter, the company expects net sales of $3.45 to $3.55 billion, an increase of 17 to 20 percent over the prior-year period. GAAP EPS are expected to be $0.60 to $0.64, including ADC acquisition-related charges of $0.10. Adjusted EPS are expected to be $0.70 to $0.74, up 9 to 16 percent compared to adjusted EPS of $0.64 in the prior-year period. Approximately $280 million of the expected sales growth and $0.02 per share of adjusted EPS is due to the impact of the ADC acquisition.

For the full fiscal year, which includes 53 weeks in 2011, the company expects sales of $13.9 to $14.3 billion, an increase of 15 to 18 percent over the prior year. GAAP EPS are expected to be $2.75 to $2.90, including acquisition-related and restructuring charges of approximately $0.30 per share. Adjusted EPS are expected to be $3.05 to $3.20, up 20 to 26 percent compared to adjusted EPS of $2.54 in the prior-year period. Approximately $1.0 billion of the expected growth and $0.12 per share of adjusted EPS is due to the impact of the ADC acquisition. Approximately $240 million of the expected growth and $0.05 per share of EPS is due to the impact of the additional week in 2011.

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This outlook assumes current foreign exchange and commodity rates.

FISCAL FIRST QUARTER 2011 RESULTS

Sales grew 11 percent compared to the prior-year quarter and 2 percent sequentially. Organically, sales increased 11 percent compared to the prior year and were down 2 percent sequentially. By segment, and on an organic basis, sales in the Transportation Connectivity segment were up 16 percent compared to the prior year, driven primarily by continued growth in automotive production and increased content. Sales in the Communications and Industrial Solutions segment were up 13 percent compared to the prior year due to broad-based growth across most end markets. Sales were up 2 percent compared to the prior year in the Network Solutions segment driven by improvement in all end markets, excluding our SubCom business.

The adjusted operating margin was 14.5 percent in the quarter, up 300 basis points versus the prior year and up 30 basis points sequentially.

CASH FLOW

Cash from continuing operations was $154 million during the quarter. Free cash flow was $45 million, including $35 million of ADC acquisition-related cash expenditures. The company expects free cash flow in excess of $1.2 billion in fiscal 2011, excluding the estimated $105 million of cash expenditures related to the ADC acquisition.

ORDERS

Total company orders were $3.2 billion, an increase of 7 percent compared to the prior year and up 7 percent sequentially. The book-to-bill ratio was 0.99 overall and 1.03, excluding the SubCom business.

ADDITIONAL ITEMS

-- During the quarter, the company issued $250 million aggregate principal amount of 4.875% Senior Notes due 2021. In addition, the company commenced offers to purchase $650 million of outstanding ADC debt.

-- At the company's Annual General Meeting of Shareholders in March 2011, shareholders will be asked to approve a recommendation to increase the quarterly dividend by 12.5 percent to $0.18 per share for the four fiscal quarters beginning with the third quarter of 2011.

More information on TE can be found at www.te.com.

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