10-QPeriod: Q1 FY2025

TE Connectivity plc Quarterly Report for Q1 Ended Dec 27, 2024

Filed January 24, 2025For Securities:TEL

Summary

TE Connectivity plc (TEL) reported flat net sales for the first quarter of fiscal year 2025, with $3.836 billion in net sales, consistent with the prior year period. While the Industrial Solutions segment saw a robust 10.8% increase in net sales driven by growth in digital data networks and aerospace, defense, and marine sectors, this was offset by a 6.3% decline in the Transportation Solutions segment, primarily due to softness in automotive and commercial transportation markets. The company's gross margin improved to 35.5% from 34.6% year-over-year, indicating better pricing and operational efficiencies. Looking ahead, TE Connectivity anticipates second-quarter fiscal year 2025 net sales of approximately $3.95 billion, a slight decrease from the prior year's comparable period. A significant factor impacting future results is an anticipated $600 million reduction in net deferred tax assets in the quarter ending March 28, 2025, related to new global minimum corporate tax guidance. The company also continued its strategic acquisitions in the Industrial Solutions segment and maintained a strong focus on capital allocation, including share repurchases.

Financial Highlights

49 data points
Beta

Revenue

$3.84B

35.5% Gross Margin

Net Income

$528.00M

13.8% Net Margin

EPS (Diluted)

$1.75

Total Assets

$22.44B

Cash & Equivalents

$1.25B

Free Cash Flow

$673.00M

Financial Statements
Beta
Revenue$3.84B
Cost of Revenue$2.48B
Gross Profit$1.36B
SG&A Expenses$427.00M
Operating Income$690.00M
Net Income$528.00M
EPS (Basic)$1.77
EPS (Diluted)$1.75
Shares Outstanding (Basic)299.00M
Shares Outstanding (Diluted)301.00M

Key Highlights

  • 1Net sales remained flat year-over-year at $3.836 billion for the first quarter of fiscal 2025.
  • 2Industrial Solutions segment net sales increased by 10.8%, driven by Digital Data Networks and Aerospace, Defense, and Marine.
  • 3Transportation Solutions segment net sales decreased by 6.3%, impacted by declines in Automotive and Commercial Transportation.
  • 4Gross margin improved to 35.5% from 34.6% in the prior year quarter.
  • 5The company announced an anticipated $600 million reduction in net deferred tax assets in the upcoming quarter due to new global minimum tax guidance.
  • 6TE Connectivity completed two acquisitions during the quarter for a combined cash purchase price of $325 million, both within the Industrial Solutions segment.
  • 7Net cash provided by operating activities increased to $878 million from $719 million in the prior year period.

Frequently Asked Questions

TE Connectivity's net sales were flat year-over-year, totaling $3.836 billion for the quarter ended December 27, 2024. This was a result of strong growth in the Industrial Solutions segment being offset by a decline in the Transportation Solutions segment.

The company anticipates that new guidance from the OECD on the 15% global minimum corporate tax will likely lead to a reduction of approximately $600 million in net deferred tax assets in the quarter ending March 28, 2025. This relates to a tax credit obtained by a Swiss subsidiary.

The Industrial Solutions segment experienced robust growth with a 10.8% increase in net sales, primarily driven by demand in digital data networks and aerospace, defense, and marine. Conversely, the Transportation Solutions segment saw a 6.3% decrease in net sales, largely due to weaker performance in automotive and commercial transportation markets.

For the second quarter of fiscal 2025, TE Connectivity expects net sales to be approximately $3.95 billion, a slight decrease compared to the prior year. This outlook also incorporates an expected diluted loss per share of approximately $0.05, which includes a significant impact from the aforementioned tax matter.