TE Connectivity Ltd. TEL has reported first-quarter fiscal 2022 adjusted earnings of $1.76 per share, which surpassed the Zacks Consensus Estimate by 8.6%. The figure rose 20% year over year.

Net sales in the reported quarter were $3.82 billion, which beat the consensus mark of $3.73 billion. The figure rose 8% from the year-ago quarter.

Top-line growth was driven by well-performing communications and industrial solutions of the company.

However, TE Connectivity witnessed a sluggish performance of its transportation solutions in the reported quarter.

Nevertheless, the company’s strong momentum across hybrid and electric vehicles, data and devices, factory automation, renewable energy, and cloud remains a major positive.

TE Connectivity Ltd. Price, Consensus and EPS Surprise

TE Connectivity Ltd. price-consensus-eps-surprise-chart | TE Connectivity Ltd. Quote

Top-Line Details

Transportation Solutions: The segment generated $2.16 billion, which accounted for 56% of net sales. The figure declined 3% year over year. This was primarily due to weak automotive production, which led to a 7% decrease in automotive sales from the year-ago quarter.

Nevertheless, the company continued benefiting from the growing proliferation of electric vehicles and strong content trends of electronification in the automotive space. Further, commercial transportation sales grew 10% year over year. Also, sensor sales grew 3% from the year-ago quarter on the back of solid momentum across transportation and industrial applications.

Industrial Solutions: The segment generated $1.06 billion, which accounted for 28% of net sales. The figure rose 21% year over year. This was driven by robust industrial equipment sales, which grew 57% from the prior-year quarter, owing to the growing capital investment in factory automation applications. Solid momentum across renewable applications led to 9% growth in energy sales. The recovery in interventional procedures led to 7% year-over-year growth in the medical category.

However, weakness in aerospace, defense and marine sales, which were down 3% year over year, was concerning.

Communications Solutions: The segment generated $601 million, which accounted for 16% of net sales. Further, the figure rose 41% year over year. This was driven by solid content growth in high-speed cloud applications, which led to a year-over-year rise of 49% in data and devices sales. Appliance sales grew 32% from the prior-year quarter, which contributed well.

Operating Details

Per management, the gross profit was $1.2 billion, which was up 7.3% year over year. As a percentage of revenues, the figure contracted 30 basis points (bps) from the year-ago quarter to 32.2%.

We note that selling, general and administrative expenses, and research and development expenses of $363 million and $175 million rose 0.5% and 8% year over year, respectively.

The company’s adjusted operating margin was 18.6% in the reported quarter, which expanded 90 bps year over year.