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TE Connectivity plc

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Business Summary

TE Connectivity is a global industrial technology leader whose broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, energy networks, automated factories, and data centers enabling artificial intelligence. The company believes its two segments served a combined market of approximately $200 billion as of fiscal year end 2025.

The Transportation Solutions segment's major competitors include Yazaki, Aptiv, Sumitomo, Sensata, Honeywell, Molex, and Amphenol. The Industrial Solutions segment competes primarily against Amphenol, Hubbell, Carlisle Companies, Integer Holdings, Molex, Omron, JST, and Korea Electric Terminal (KET). The company believes that as electronic component technologies continue to proliferate, its broad product portfolio and engineering capability give it a potential competitive advantage when addressing the needs of its global customers.

The company generates revenue by manufacturing and selling a broad portfolio of products to customers in various industries, with no single customer accounting for a significant amount of net sales in fiscal 2025, 2024, or 2023. In fiscal 2025, direct sales represented approximately 75% of total net sales, with the remainder sold indirectly via third-party distributors. The company sells its products into approximately 130 countries primarily through direct selling efforts to manufacturers.

The Transportation Solutions segment is a leader in connectivity and sensor technologies, with primary products including terminals and connector systems and components, sensors, heat shrink tubing, relays, and application tooling. The segment's net sales were $9,388 million in fiscal 2025, representing 54% of total net sales, with end markets including Automotive (75% of segment net sales), Commercial transportation (15%), and Sensors (10%). The Industrial Solutions segment is a leading supplier of products that connect and distribute power, data, and signals, with primary products including terminals and connector systems and components, interventional medical components, heat shrink tubing, relays, wire and cable, and filters. The segment's net sales were $7,874 million in fiscal 2025, representing 46% of total net sales, with end markets including Digital data networks (28% of segment net sales), Automation and connected living (27%), Aerospace, defense, and marine (19%), Energy (17%), and Medical (9%).

During fiscal 2025, the company acquired Richards Manufacturing Co., a U.S.-based producer of overhead and underground electrical and gas distribution products, for cash of approximately $2.3 billion, net of cash acquired, which has been reported as part of the energy business within the Industrial Solutions segment. The company also acquired two additional businesses during fiscal 2025 for a combined cash purchase price of $321 million, net of cash acquired, both reported in the Industrial Solutions segment. During fiscal 2024, the company acquired approximately 98.7% of the outstanding shares of Schaffner Holding AG for CHF 505.00 per share in cash for a purchase price of CHF 294 million (equivalent to $339 million), net of cash acquired, reported in the Industrial Solutions segment. The company repurchased approximately 8 million of its ordinary shares for $1,356 million during fiscal 2025. The board of directors authorized an increase of $2.5 billion in the share repurchase program during fiscal 2025. The company paid cash dividends to shareholders of $2.72 per ordinary share in fiscal 2025. In September 2025, the board declared a regular quarterly cash dividend of $0.71 per ordinary share, payable on December 12, 2025.

Fiscal 2025 net sales increased 8.9% from fiscal 2024 to $17,262 million, driven by sales growth in the Industrial Solutions segment partially offset by sales declines in the Transportation Solutions segment. On an organic basis, net sales increased 6.4% in fiscal 2025. Gross margin increased $623 million to $6,079 million, with gross margin as a percentage of net sales improving to 35.2% from 34.4% in the prior year. Operating income increased $415 million to $3,211 million, and operating margin improved to 18.6% from 17.6%. Net cash provided by operating activities was $4,139 million in fiscal 2025.

Business Outlook

In the first quarter of fiscal 2026, the company expects net sales to be approximately $4.5 billion as compared to $3.8 billion in the first quarter of fiscal 2025, reflecting sales growth in both the Industrial Solutions and Transportation Solutions segments. The company expects diluted earnings per share from continuing operations to be approximately $2.33 per share in the first quarter of fiscal 2026. This outlook reflects the positive impact of foreign currency exchange rates on net sales and earnings per share of approximately $113 million and $0.02 per share, respectively, in the first quarter of fiscal 2026 as compared to the same period of fiscal 2025 and includes the impact of currently enacted tariffs.

The Industrial Solutions segment is expected to benefit from the acquisition of Richards Manufacturing, which contributed net sales of $179 million in fiscal 2025. The digital data networks end market within Industrial Solutions saw organic net sales increase 72.6% in fiscal 2025 due primarily to growth in AI and cloud applications, representing a significant growth vector. The energy end market within Industrial Solutions saw organic net sales increase 15.0% in fiscal 2025 due to growth in the Americas region driven by renewable energy applications as well as growth in the EMEA and Asia-Pacific regions.

Annualized cost savings related to restructuring actions initiated in fiscal 2025 are expected to be approximately $80 million and are expected to be fully realized by the end of fiscal 2026. Cost savings will be reflected primarily in cost of sales and selling, general, and administrative expenses. For fiscal 2026, the company expects total restructuring charges to be approximately $100 million.

The company expects fiscal 2026 capital spending levels to be approximately 5% of net sales. The company expects pension contributions to be approximately $70 million in fiscal 2026, before consideration of any voluntary contributions. The company expects to purchase approximately 185 million pounds of copper, 105,000 troy ounces of gold, 1.7 million troy ounces of silver, and 12,000 troy ounces of palladium in fiscal 2026.

For fiscal 2026, the company expects total restructuring spending, which will be funded with cash from operations, to be approximately $100 million. The company expects pension contributions to be approximately $70 million in fiscal 2026, before consideration of any voluntary contributions.

The company is actively monitoring developments in tariff and trade policies and the potential impacts on its business, using pricing actions and sourcing changes to largely mitigate the impacts of new tariffs and changes in existing tariff rates. The company continues to monitor military conflicts in certain parts of the world as well as escalating tensions in surrounding countries and associated sanctions, which did not have a significant impact on its business during fiscal 2025 and 2024.

Risk Factors

The company is dependent on the automotive industry, which represented approximately 41% of net sales for fiscal 2025, and significant periodic downturns in this industry have had material adverse effects on results. The company faces exposure to product liability and warranty claims in the event that its products actually or allegedly fail to perform as expected, or the use of its products results, or is alleged to result, in death, bodily injury, and/or property damage. The company has experienced, and may in the future experience, pressure to lower its prices, with historical price erosion averaging from 1% to 2% each year. The company has sizeable operations in China, including 19 principal manufacturing sites, and approximately 25% of its net sales in fiscal 2025 were made to customers in China, exposing it to economic and regulatory volatility in that country. The valuation allowance for deferred tax assets was $8,821 million at fiscal year end 2025, reflecting significant uncertainty regarding the realizability of certain deferred tax assets.

Management Priorities

Management's message emphasizes the company's position as a global industrial technology leader creating a safer, sustainable, productive, and connected future. The forward-looking guidance for the first quarter of fiscal 2026 expects net sales to be approximately $4.5 billion and diluted earnings per share from continuing operations to be approximately $2.33 per share. The strategic priorities emphasized include aligning the organization around the current strategy through the new two-segment structure (Transportation Solutions and Industrial Solutions), pursuing growth in AI and cloud applications within the digital data networks end market, and continuing to manage costs through restructuring and other cost reduction initiatives.

View Source Annual Report on SEC.gov ↗

References

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  11. [11] Item 7, MD&A — Acquisitions
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  17. [17] Item 7, MD&A — Cash Flows from Financing Activities
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  19. [19] Item 5, Dividends
  20. [20] Item 5, Dividends
  21. [21] Item 7, MD&A — Summary of Fiscal 2025 Performance
  22. [22] Item 7, MD&A — Results of Operations
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  27. [27] Item 7, MD&A — Outlook
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  31. [31] Item 7, MD&A — Segment Results
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  33. [33] Item 7, MD&A — Restructuring and Other Charges, Net
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  36. [36] Item 7, MD&A — Cash Flows from Investing Activities
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  38. [38] Item 7, MD&A — Cash Flows from Operating Activities
  39. [39] Item 7, MD&A — Economic Conditions
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  41. [41] Item 1A, Risk Factors
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  46. [46] Item 8, Note 15 — Income Taxes
  47. [47] Item 8, Consolidated Statements of Operations
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  61. [61] Item 8, Consolidated Balance Sheets
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  63. [63] Item 8, Consolidated Statements of Cash Flows
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  65. [65] Item 7, MD&A — Segment Results
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Analysis on 6/9/2026