01—Abstract
Summary
Summary of the 10-Q filed January 24, 2025. Cited figures are marked; the original filing is the authoritative source.
TE Connectivity plc (TEL) reported flat net sales for the first quarter of fiscal year 2025, with $3.836 billiona 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 billionb, a slight decrease from the prior year's comparable period.
A significant factor impacting future results is an anticipated $600 millionc 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.
02—Key points
Key Highlights
- Net sales remained flat year-over-year at $3.836 billion for the first quarter of fiscal 2025.
- Industrial Solutions segment net sales increased by 10.8%, driven by Digital Data Networks and Aerospace, Defense, and Marine.
- Transportation Solutions segment net sales decreased by 6.3%, impacted by declines in Automotive and Commercial Transportation.
- Gross margin improved to 35.5% from 34.6% in the prior year quarter.
- The company announced an anticipated $600 million reduction in net deferred tax assets in the upcoming quarter due to new global minimum tax guidance.
- TE Connectivity completed two acquisitions during the quarter for a combined cash purchase price of $325 million, both within the Industrial Solutions segment.
- Net cash provided by operating activities increased to $878 million from $719 million in the prior year period.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, TE Connectivity plc kept $0.14.
- Revenue$3.84B100.0%
- Cost of revenue−$2.48B64.5%
- Gross profit$1.36B35.5%
- Operating costs−$670.0M17.5%
- Operating income$690.0M18.0%
- Interest, other & tax−$162.0M4.2%
- Net income$528.0M13.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed January 24, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $3.84B$3.83B | +0.1% |
| Cost of Revenue | $2.48B$2.51B | −1.2% |
| Gross Profit | $1.36B$1.32B | +2.7% |
| SG&A Expenses | $427.00M$424.00M | +0.7% |
| Operating Income | $690.00M$698.00M | −1.1% |
| Net Income | $528.00M$1.80B | −70.7% |
| EPS (Basic) | $1.77$5.80 | −69.5% |
| EPS (Diluted) | $1.75$5.76 | −69.6% |
| Shares Outstanding (Basic) | 299.00M311.00M | −3.9% |
| Shares Outstanding (Diluted) | 301.00M313.00M | −3.8% |
05—Questions
Frequently Asked Questions
How did TE Connectivity's net sales perform in the first quarter of fiscal 2025 compared to the previous year?
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.
What is the expected impact of the new global minimum tax guidance on TE Connectivity?
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.
How did the performance of the two main segments, Transportation Solutions and Industrial Solutions, differ during the quarter?
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.
What is TE Connectivity's outlook for the second quarter of fiscal 2025?
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.
06—Continue