TE Connectivity plc Reports Financial Results for the Quarter Ended March 28, 2025
TE Connectivity plc (TEL) reported its quarterly financial results for the period ended March 28, 2025. The company’s revenue increased by 4.5% year-over-year to $3.4 billion, driven by growth in its industrial and automotive segments. Net income rose to $243 million, or $0.82 per diluted share, compared to $214 million, or $0.73 per diluted share, in the same period last year. The company’s gross margin expanded by 120 basis points to 44.1%, while operating expenses increased by 5.5% to $1.1 billion. As of March 28, 2025, TEL had cash and cash equivalents of $1.4 billion and total debt of $4.3 billion. The company’s financial position remains strong, with a debt-to-equity ratio of 0.45 and a current ratio of 1.43.
Overview
TE Connectivity plc (“TE Connectivity” or the “Company”) is a global industrial technology leader that creates a safer, sustainable, productive, and connected future. The company provides a broad range of connectivity and sensor solutions that enable the distribution of power, signal, and data to advance various industries.
Change in Place of Incorporation At the beginning of fiscal 2025, TE Connectivity’s jurisdiction of incorporation changed from Switzerland to Ireland. This change is not expected to have any material impact on the company’s operations or financial results.
New Segment Structure Effective for fiscal 2025, TE Connectivity reorganized its management and segments to align with its fiscal 2025 strategy. The company now operates through two reportable segments: Transportation Solutions and Industrial Solutions.
Summary of Performance
- Net sales increased 4.4% and 2.3% in the second quarter and first six months of fiscal 2025, respectively, driven by sales growth in the Industrial Solutions segment, partially offset by declines in the Transportation Solutions segment.
- On an organic basis, net sales increased 5.3% and 2.7% in the second quarter and first six months of fiscal 2025, respectively.
- The board of directors declared a regular quarterly dividend of $0.71 per ordinary share, payable on June 10, 2025.
- Net cash provided by operating activities was $1,531 million in the first six months of fiscal 2025.
Outlook In the third quarter of fiscal 2025, TE Connectivity expects net sales of approximately $4.3 billion and diluted earnings per share from continuing operations of approximately $2.02 per share. This outlook includes the impact of currently enacted tariffs, which the company expects to largely mitigate through pricing actions and sourcing changes.
Acquisitions During the first six months of fiscal 2025, TE Connectivity acquired two businesses for a combined cash purchase price of $321 million, net of cash acquired. On April 1, 2025, the company acquired Richards Manufacturing, a U.S.-based producer of electrical and gas distribution products, for cash of approximately $2.3 billion, net of cash acquired.
Results of Operations
Net Sales TE Connectivity’s net sales increased 4.4% and 2.3% in the second quarter and first six months of fiscal 2025, respectively, compared to the same periods of fiscal 2024. This was driven by organic net sales growth of 5.3% and 2.7%, respectively, partially offset by the negative impact of foreign currency translation.
The Transportation Solutions segment experienced a 3.9% and 5.1% decline in net sales in the second quarter and first six months of fiscal 2025, respectively, due to sales declines in all end markets. In contrast, the Industrial Solutions segment saw a 17.2% and 14.1% increase in net sales during the same periods, primarily driven by growth in the digital data networks, energy, and aerospace, defense, and marine end markets.
Cost of Sales and Gross Margin Gross margin increased $96 million and $132 million in the second quarter and first six months of fiscal 2025, respectively, compared to the same periods of fiscal 2024, primarily due to higher volume. The company’s cost of sales and gross margin are subject to variability in raw material prices, which continue to fluctuate for many of the raw materials used.
Operating Expenses Selling, general, and administrative expenses increased $10 million and $13 million in the second quarter and first six months of fiscal 2025, respectively, due primarily to increased selling expenses to support higher sales levels, partially offset by the release of reserves associated with trade compliance matters.
Restructuring and other charges, net, were $45 million and $95 million in the second quarter and first six months of fiscal 2025, respectively, related to a restructuring program associated with footprint consolidation and cost structure improvements in both segments.
Operating Income Operating income increased $56 million and $48 million in the second quarter and first six months of fiscal 2025, respectively, compared to the same periods of fiscal 2024. The increases were primarily due to higher volume, partially offset by restructuring and other charges.
Segment Results
Transportation Solutions Net sales in the Transportation Solutions segment decreased 3.9% and 5.1% in the second quarter and first six months of fiscal 2025, respectively, due to sales declines in all end markets. Operating income in this segment decreased $32 million and $73 million in the second quarter and first six months of fiscal 2025, respectively, primarily due to lower volume and price erosion, partially offset by improved manufacturing productivity.
Industrial Solutions Net sales in the Industrial Solutions segment increased 17.2% and 14.1% in the second quarter and first six months of fiscal 2025, respectively, driven by organic net sales growth of 15.7% and 12.3%, respectively. The growth was primarily due to strength in the digital data networks, aerospace, defense, and marine, and energy end markets. Operating income in this segment increased $88 million and $121 million in the second quarter and first six months of fiscal 2025, respectively, primarily due to higher volume.
Liquidity and Capital Resources TE Connectivity believes that cash generated from operations and other sources of potential funding will be sufficient to meet its anticipated capital needs for the foreseeable future, including the acquisition of Richards Manufacturing and the payment of debt and dividends. The company may also use excess cash to repurchase shares or make strategic acquisitions.
In the first six months of fiscal 2025, net cash provided by operating activities increased to $1,531 million, up from $1,429 million in the same period of fiscal 2024. Capital expenditures were $435 million and $318 million in the first six months of fiscal 2025 and 2024, respectively.
TE Connectivity’s total debt increased to $5,614 million as of March 28, 2025, up from $4,203 million as of September 27, 2024, primarily due to the issuance of commercial paper and a new 364-day credit facility to fund the acquisition of Richards Manufacturing.
Outlook and Risks TE Connectivity provided an outlook for the third quarter of fiscal 2025, expecting net sales of approximately $4.3 billion and diluted earnings per share from continuing operations of approximately $2.02 per share. This outlook includes the impact of currently enacted tariffs, which the company expects to largely mitigate through pricing actions and sourcing changes.
The company faces various risks and uncertainties, including global economic conditions, industry cyclicality, raw material availability and costs, product liability and warranty claims, foreign currency exchange rate fluctuations, and risks associated with acquisitions and divestitures, among others. These risks could have a material adverse effect on TE Connectivity’s results of operations, financial position, and cash flows.
