TE Connectivity CEO on earnings beat, 2021 outlook

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman speak with TE Connectivity CEO about the company’s latest quarter.

Video Transcript

MYLES UDLAND: Hi. Welcome back to Yahoo Finance Live. Myles Udland here in New York on this Wednesday morning. A lot of craziness in the market, but we are in the thick of earnings season. One company out with their results before the market today, TE Connectivity, the industrial giant. Seeing shares basically unchanged following their latest results. Terrence Curtin is the company's CEO, and he joins us now to discuss.

Terrence, great to see you this morning. I'd love to just start with the state of your business as it relates to the pandemic. Certainly a big shake-up, but you guys have come out the last couple of quarters and been able to offer guidance to the street on where you think things are headed. And from my seat, I read that as, you know, relative comfort with the stabilization in your markets.

TERRENCE CURTIN: Well, first of all, thank you for having me. And you know, one of the things that you sort of said, we're pretty proud of the quarter we put up in, you know, what remains a dynamic environment with COVID. And really, it goes to the globalness of our business, as well as the many markets we play across. And what we've been seeing-- and we bring connectors and sensors to the world that we all rely on-- is we have been seeing a world that is globally improving.

And what had started in Asia, and certainly in Europe and North America a little bit later, we do see improvement across our markets, even though it is uneven. And we did go out with guidance about the March quarter, where we expect that improvement to continue, where we expect earnings to be up double-digit, as well as sales up double-digit. And it does feel better that the world is improving and rebounding off of certainly the depths of COVID last summer.

BRIAN SOZZI: Yeah, Terrence, just looking at how some of your businesses performed in the quarter, the auto part of the business, sales up 11.3%. Commercial product or commercial transportation up 24.9%. Even appliances up 23.1%. Do you think we're-- do you think we'll get a V-shaped recovery around the globe as more people get vaccinated?

TERRENCE CURTIN: Well, I think we're going to get a recovery. I would still say, Brian, it is uneven. We do have some markets that actually are still well off pre-COVID levels, like commercial aerospace. But some of the markets that you mentioned are recovering a little bit faster than we expected.

And the thing that we really like about it is not only the innovation we bring into those markets, that, you know, as the car goes more electric from a powertrain globally, but also that we're seeing consumer demand be strong. We're seeing car inventories in the world, when you-- whether it's in China or whether it's United States, be at very good levels, healthy levels. And really gives us some confidence that the improvement that we've been seeing in the markets can continue.

And how we bring innovation to our customers is just as important because one of the things that has been unique about this pandemic has been our customers have not stopped innovating. In some other cycles, you would have had some pauses in maybe where they wanted to go with designs, but things like electric vehicle, full steam ahead. And those types of things create economic activity, and it's really good how we've been able to partner with them.

JULIE HYMAN: You know, Terrence, I want to follow up on that, because I saw one estimate that you guys get about 60% of your revenue from the auto sector. So it's a very important area for you, and important clients for you. Where are you seeing the biggest demand specifically within autos, either for the type of technology or the type of vehicle that the technology is going into?

TERRENCE CURTIN: Well, what's really nice about auto for us is we're essentially on every car in the planet. And so we're very global. And our position's global. We have a leading position in every market where cars are made. And one of the things that we've been investing in that there has been excitement, but I would also say, during COVID, the momentum around it stayed very strong was around electric vehicle.

So if you think about electric vehicles, there's going to probably be about 9 million electric vehicles made on the planet this year. That's going to be up 50% from last year, which grew from the year before. Global autos made about 80 some million. And really, when we look about how that architecture is changing and where our engineers help our customers bring that architecture to life is really one of the bigger things that are driving content and growth above market for TE.

And it's really where we get to help impact how that rollout occurs. And we're very excited about it. And what's been nice is it's not only been early on Asia was very strong in electric vehicles. You're seeing with regulations in Europe, and you're also seeing in the US increased adoption and consumer purchasing and preference towards it. So all of those are helping our business. And it's actually things we get really excited about. And it's going to be growth opportunities for us in the future, as well.

BRIAN SOZZI: Terrence, you're on-- you're a member of the board of directors of the US-China Business Council. How would you characterize the US relationship with China after four years of President Trump? And what would you like to see from the administration, the Biden administration?

TERRENCE CURTIN: Well, on the US-China Business Council, we really want to make sure, you know, both sides are fairly represented. And that's the dialogue that we try to make sure happens between the governments, to make sure, you know, economic benefit for both sides. I do think some of the policies that come out under President Trump will continue under President Biden to make sure there is a level playing field. But it's really around, when we look at the US-China Business Council, it's how do we drive global economic growth for the world, and really make sure those policies get put in place.

So I still think there's a lot of work to do on both sides. I do think some of the policies are going to stay in place due to some of the topics. But net-net, I do hope that, because we are such a global business, that the governments do get more constructive in the discussion.

MYLES UDLAND: All right. Terrence Curtin is the CEO of TE Connectivity. Terrence, it's great to speak with you this morning. Thanks so much for joining the program, and I hope we talk soon.

TERRENCE CURTIN: Thank you all for having me.