On April 23, 2025, TE Connectivity PLC (TEL, Financial) released its 8-K filing for the fiscal second quarter ended March 28, 2025. TE Connectivity, the world's largest electrical connector supplier, provides interconnect and sensor solutions across transportation, industrial, and communications markets. Operating in 150 countries with over 500,000 stock-keeping units, TE Connectivity plays a crucial role in the electrical architecture of its customers' innovations.
Performance and Challenges
TE Connectivity reported net sales of $4.1 billion, marking a 4% increase year over year on a reported basis and a 5% increase organically. This growth was primarily driven by double-digit expansion in the Industrial segment. The company's GAAP diluted earnings per share (EPS) from continuing operations was $0.04, impacted by a one-time non-cash tax charge due to a change in tax law. However, the adjusted EPS reached a record $2.10, up approximately 13% year over year, surpassing the analyst estimate of $1.17.
The company faced challenges such as a one-time tax charge, which affected the GAAP EPS. Despite this, the strong operational performance and strategic positioning in key markets helped mitigate these challenges.
Financial Achievements
TE Connectivity's financial achievements are significant for the hardware industry, as they reflect the company's ability to leverage its broad portfolio and global presence. The adjusted operating margin was 19.4%, driven by robust performance across segments. Orders increased by 6% year over year and sequentially, totaling $4.25 billion.
Cash flow from operating activities in the first half of the fiscal year was $1.5 billion, with free cash flow at approximately $1.1 billion. The company returned around $1 billion to shareholders and announced a 9% dividend increase, highlighting its commitment to shareholder value.
Key Financial Metrics
TE Connectivity's income statement revealed a strong operating margin of 18.1%, with an adjusted operating margin of 19.4%. These metrics are crucial as they indicate the company's efficiency in managing its operations and costs. The balance sheet and cash flow statement further underscore the company's financial health, with significant cash flow generation and strategic capital allocation.
“Our teams delivered strong operational performance that led to record adjusted EPS and results that exceeded our guidance on both sales and earnings,” said TE Connectivity CEO Terrence Curtin.
Analysis and Outlook
TE Connectivity's performance in the second quarter of fiscal 2025 demonstrates its resilience and strategic execution in a challenging macroeconomic environment. The company's focus on expanding its Industrial segment and maintaining strong margins in the Transportation segment has been pivotal. Looking ahead, TE Connectivity expects continued momentum, with third-quarter net sales projected at approximately $4.30 billion, an 8% increase year over year. The GAAP EPS from continuing operations is expected to be around $2.02, with an adjusted EPS of approximately $2.06.
Overall, TE Connectivity's robust financial performance and strategic initiatives position it well for future growth, making it an attractive consideration for value investors and industry stakeholders.
Explore the complete 8-K earnings release (here) from TE Connectivity PLC for further details.
