How strong was TE Connectivity's growth in the third quarter of fiscal 2025?

Net sales were a record $4.53 billion, up 14% reported and 9% organic year over year. Growth was concentrated in the Industrial Solutions segment (up 30% reported, 21% organic), with Digital Data Networks up 84% reported on AI-related demand. Transportation Solutions grew only 3% reported and 1% organically, with automotive content gains in Asia offset by weakness in Western regions and lower vehicle production.

Did the Richards acquisition affect reported results, and how did TE fund it?

Yes. The Richards acquisition, in the Energy business, closed in Q3 for about $2.3 billion and contributed to reported growth; it is excluded from organic growth for the first twelve months. TE funded it largely with new debt, issuing about $1.46 billion in Q3 (and $2.2 billion year to date), and reduced commercial paper by $1.5 billion in the quarter. Total debt rose to about $5.7 billion from $4.2 billion a year earlier.

What is the difference between GAAP and adjusted EPS, and what drove it this quarter?

GAAP diluted EPS from continuing operations was $2.14 versus adjusted EPS of $2.27. The $0.13 gap reflects $0.08 of acquisition-related charges (largely Richards deal costs) and $0.05 of net restructuring and other charges. Adjusted EPS excludes these items, and the effective tax rate was 24.6% on a GAAP basis and 24.0% adjusted.

What does the Q4 guidance imply for investors?

For Q4 FY25, TE expects net sales of about $4.55 billion (+12% reported, +6% organic), GAAP EPS of about $2.18, and adjusted EPS of about $2.27 (+16% y/y). The guidance implies sequential stability in adjusted EPS despite higher sales, and points to the full-year FY25 outlook of about 8% reported and 5% organic sales growth and adjusted EPS up about 13%. Note the GAAP EPS comparison is distorted by a very low prior-year base that included a large tax item.

Is TE's cash generation and capital return sustainable?

Year-to-date free cash flow of about $2.06 billion covered $594 million of dividends and $910 million of share repurchases, leaving room after those payments. However, cash fell to $672 million after the Richards deal, and debt is significantly higher. Investors should watch whether the stronger Industrial growth and margin expansion translate into continued FCF growth to support both the dividend and buybacks while servicing higher leverage.

TEL 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 23, 2025. Cited figures are marked; the original filing is the authoritative source.

TE Connectivity (NYSE: TEL) reported fiscal Q3 2025 results (quarter ended June 27, 2025) that exceeded its own guidance, with record net sales of $4.53 billion^a (reported +14% year over year, +9% organic), driven primarily by the Industrial Solutions segment, which grew 30% reported and 21% organic.

GAAP diluted EPS from continuing operations was $2.14^b (+15%), while adjusted EPS hit a quarterly record of $2.27 (+19%). Operating margin was 18.9% (GAAP) and 19.9% adjusted (a record, up about 60 bps). Orders were $4.5 billion, up both year over year and sequentially, with a book-to-bill of 0.99.

Cash generation was a standout: operating cash flow was $1.19 billion^c in the quarter and $2.72 billion year to date, and free cash flow was a quarterly record of $962 million, with year-to-date FCF of about $2.06 billion (up roughly 4%). The company completed the Richards acquisition (Energy business) for about $2.3 billion in cash during the quarter, pushing total debt to about $5.7 billion from roughly $4.2 billion a year earlier and reducing cash to $672 million. TE returned $1.5 billion to shareholders year to date through dividends and buybacks.

For Q4 FY25, management guided to net sales of about $4.55 billion^d (+12% reported, +6% organic), GAAP EPS of about $2.18, and adjusted EPS of about $2.27 (+16% year over year). Investors should note that the GAAP Q4 EPS figure is compared against a very low prior-year base affected by prior-year tax items, and that Transportation Solutions sales are only growing modestly, with the Industrial segment carrying most of the growth. Year-to-date GAAP results were depressed by a prior-year tax charge, so reported year-over-year GAAP comparisons are distorted.

02—Key points

Key Highlights

Record Q3 net sales of $4.53B, up 14% reported and 9% organic; Industrial Solutions sales rose 30% reported (21% organic) while Transportation Solutions grew 3% reported (1% organic).
Adjusted EPS of $2.27 was a quarterly record, up about 19% year over year; GAAP diluted EPS from continuing operations was $2.14, up 15%.
Adjusted operating margin reached a record 19.9% (vs. 19.3% a year ago), with Industrial adjusted margin expanding about 390 bps to 20.4%.
Q3 free cash flow was a record $962M, and year-to-date FCF of about $2.06B was up roughly 4% year over year; operating cash flow was $1.19B in the quarter.
Orders of $4.5B were up year over year and sequentially, led by Industrial growth in AI/digital data networks, energy, and AD&M; book-to-bill was 0.99.
Completed the ~$2.3B Richards acquisition (Energy), lifting total debt to about $5.7B and reducing cash to $672M; $1.5B returned to shareholders year to date.
Q4 FY25 guidance calls for ~$4.55B sales (+12% reported, +6% organic) and adjusted EPS of ~$2.27 (+16% y/y), implying double-digit adjusted growth for the quarter and about 8% reported / 5% organic sales growth for FY25.

03—Questions

Frequently Asked Questions

How strong was TE Connectivity's growth in the third quarter of fiscal 2025?
Net sales were a record $4.53 billion, up 14% reported and 9% organic year over year. Growth was concentrated in the Industrial Solutions segment (up 30% reported, 21% organic), with Digital Data Networks up 84% reported on AI-related demand. Transportation Solutions grew only 3% reported and 1% organically, with automotive content gains in Asia offset by weakness in Western regions and lower vehicle production.
Did the Richards acquisition affect reported results, and how did TE fund it?
Yes. The Richards acquisition, in the Energy business, closed in Q3 for about $2.3 billion and contributed to reported growth; it is excluded from organic growth for the first twelve months. TE funded it largely with new debt, issuing about $1.46 billion in Q3 (and $2.2 billion year to date), and reduced commercial paper by $1.5 billion in the quarter. Total debt rose to about $5.7 billion from $4.2 billion a year earlier.
What is the difference between GAAP and adjusted EPS, and what drove it this quarter?
GAAP diluted EPS from continuing operations was $2.14 versus adjusted EPS of $2.27. The $0.13 gap reflects $0.08 of acquisition-related charges (largely Richards deal costs) and $0.05 of net restructuring and other charges. Adjusted EPS excludes these items, and the effective tax rate was 24.6% on a GAAP basis and 24.0% adjusted.
What does the Q4 guidance imply for investors?
For Q4 FY25, TE expects net sales of about $4.55 billion (+12% reported, +6% organic), GAAP EPS of about $2.18, and adjusted EPS of about $2.27 (+16% y/y). The guidance implies sequential stability in adjusted EPS despite higher sales, and points to the full-year FY25 outlook of about 8% reported and 5% organic sales growth and adjusted EPS up about 13%. Note the GAAP EPS comparison is distorted by a very low prior-year base that included a large tax item.
Is TE's cash generation and capital return sustainable?
Year-to-date free cash flow of about $2.06 billion covered $594 million of dividends and $910 million of share repurchases, leaving room after those payments. However, cash fell to $672 million after the Richards deal, and debt is significantly higher. Investors should watch whether the stronger Industrial growth and margin expansion translate into continued FCF growth to support both the dividend and buybacks while servicing higher leverage.

04—Continue

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