A Decade of Change for TE Connectivity Corporation

By Connector Supplier | December 12, 2016

Thomas Lynch led TE Connectivity for 11 years, making major strides in production while boosting its role in products for harsh environments.

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te-logoTerrence Curtin, board member and president of TE Connectivity, will succeed Thomas J. Lynch as the company’s new CEO, effective March 9, 2017. Lynch, current chairman of the board and CEO, will become executive chairman.

tom-lynchLynch has served as the company’s CEO since 2006. During his eleven year tenure, the company has changed significantly.

We first met Lynch a decade ago at Electronica. The company was just preparing to spin-off from Tyco International and announced plans to become a public company under the name of Tyco Electronics. When asked what his primary objectives were for the company, he said he wanted Tyco Electronics to “become a better operating company. Specifically, reduce the manufacturing footprint, improve productivity, reduce manufacturing costs, and increase profitability.”

Since then, the company has:

  • Reduced the number of manufacturing sites from 120 to 95 — a 21% reduction.
  • Increased the number of engineers from 6,382 to 7,186 — a 13% increase.
  • Increased adjusted net income (NI) from 8.1% to 12.3%.
  • Increased adjusted return on equity (ROE) from 9.6% to 17.7%.
  • Generated $12 billion in free cash flow.
  • Generated $11.5 billion in shareholder returns.

The company also developed a strategy to increase sales in harsh environment products. Today the company has 80% of sales in the historically profitable harsh environment markets. This strategy has helped TE achieve a FY16 adjusted operating margin of 16% and adjusted EBITDA margin of 21%.

Without question, TE Connectivity Corporation has become a more efficient manufacturer that generates more profit for each dollar of sales.

Other important facts:

  • TE is the world’s largest connector company; achieving $8.2 billion of interconnect sales in 2015 (67% of total sales).
  • TE has $3 billion more in interconnect sales than the second-largest connector company.
  • TE has a 15.8% share of the world market and an impressive 26.7% share of the European market.
  • TE is ranked #1 in all regions of the world in connector sales.
  • TE has the largest share of connector sales in the instrumentation, medical equipment, automotive, and consumer markets. TE is ranked second in the business equipment, transportation, military, and telecom/datacom markets.

TE has also implemented an acquisition strategy to add to their already large harsh environment businesses, including these acquisitions:

  • Deutsch added products for the industrial, military, and transportation markets.
  • SEACON Group added underwater fiber and signal connectors to the portfolio.
  • Measurement Specialties expanded TE’s platform of sensors.
  • Intercontec added circular metric connectors to the industrial portfolio.
  • Creganna established TE as a leader in the minimally invasive interventional medical market.

We fully expect to see an aggressive acquisition program continue that will be focused on the harsh environment market.

In conclusion, TE is a powerhouse, ranked at the top in its markets and products. The company generates impressive cash flows and profits. We predict TE will continue to do so for a long time.

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