TE Connectivity Reports Strong Q1 Performance with EPS Growth

Strong First Quarter Performance

TE Connectivity plc (NYSE: TEL) has announced remarkable results for its fiscal first quarter, demonstrating a strong start to the financial year. The company reported net sales of $3.84 billion, achieving a consistent year-over-year performance despite facing currency exchange challenges.

Overview of Financial Metrics

The first quarter highlighted several key metrics pivotal to TE Connectivity's operational success:

• Net sales remained stable at $3.84 billion, paralleling the results from the previous year on an organic basis, despite adverse impacts from currency exchange rates.
• Earnings per share (EPS) surpassed expectations, with a GAAP diluted EPS from continuing operations reaching $1.75, and an adjusted EPS of $1.95, reflecting a 6% rise year-over-year.
• Order volume increased to $4 billion, signifying a 6% growth compared to last year and a 4% increase from the previous quarter, driven primarily by momentum in the Industrial segment.
• Operating margins were notably strong at 18%, with adjusted operating margins peaking at 19.4%, breaking quarterly records spurred by effective operational execution.
• The company experienced a record cash generation during the quarter: cash from operating activities was $878 million, marking a 22% increase year-over-year, while free cash flow hit $674 million, up by 18% from the prior year.
• Shareholders saw a return of approximately $500 million, while the company promptly allocated $325 million towards strategic acquisitions within the Industrial segment.

CEO's Insights on the Quarter

"The strong operational performance showcases the commitment of our team to exceed guidance, particularly with our adjusted EPS at record levels and robust cash flow results," stated TE Connectivity CEO Terrence Curtin. He elaborated on the Transportation segment's efforts to navigate the fluctuating global vehicle production environment while maintaining innovative strides alongside valued customers. Growth trends in areas like electrification and advanced data connectivity remained focal points for TE.

Outlook for the Next Quarter

Looking ahead, TE Connectivity is optimistic about its second-quarter outlook for fiscal 2025, projecting net sales of approximately $3.95 billion. The guidance indicates a GAAP EPS from continuing operations likely hitting approximately ($0.05), inclusive of one-time non-cash tax charges influenced by recent tax law changes. Anticipations for adjusted EPS are around $1.96—a 5% increase compared to the same period last year—but do account for an expected currency exchange and tax headwind of $0.06 from last year.

Company Composition and Strategy

As of this fiscal year, TE Connectivity operates under two reportable segments: Transportation Solutions and Industrial Solutions, thanks to a reorganization instituted in the previous fiscal year. This transition aligns with the company’s strategy aimed at enhancing operational efficacy across both segments.

TE Connectivity continues to showcase its determination to innovate and create value through efficient operational practices. With an employee base exceeding 85,000, including 9,000 engineers across roughly 130 countries, the commitment to ensuring that "Every Connection Counts" remains central to their holistic approach to business.

About TE Connectivity

TE Connectivity plc is a leading global industrial technology corporation that designs and manufactures connectivity and sensor solutions. The company plays a crucial role in advancing a sustainable, connected, and productive future across diverse sectors, such as transportation, renewable energy, factories, data centers, and medical technology.

Frequently Asked Questions

What are the key highlights of TE Connectivity's Q1 results?

TE Connectivity reported stable net sales of $3.84 billion, increased EPS to $1.95, and significant cash generation of $878 million.

How did currency exchange impact TE Connectivity's sales?

Sales were negatively impacted by an increase in currency exchange headwinds compared to guidance, reflecting global market conditions.

What are the expectations for the next quarter?

The company anticipates revenues of around $3.95 billion in Q2 with an adjusted EPS forecasted at $1.96.

What strategic moves has TE Connectivity made recently?

The company returned approximately $500 million to shareholders and invested $325 million in strategic bolt-on acquisitions in the Industrial segment.

What is TE Connectivity's mission?

TE Connectivity is committed to ensuring that Every Connection Counts, emphasizing innovation and quality in all its products and services.

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