TE Connectivity (TEL) investor relations material

Strategic direction and growth outlook

• Targeting 6%-8% annual revenue growth through cycle, up from the previous 4%-6%, driven by broadening growth drivers in industrial and transportation segments and supported by secular megatrends in AI, e-mobility, energy, and automation.

• Over 60% of growth expected from the industrial segment, with digital data networks (AI/cloud) and energy as key contributors.

• Transportation segment aims for mid-single-digit growth, with automotive outpacing vehicle production by 4%-6% through increased content per vehicle.

• Focused on co-creating next-generation architectures with customers, engineering expansion, and global/localized manufacturing footprint.

• Expanding both organically and through disciplined bolt-on acquisitions, especially in the Industrial segment.

Financial guidance and capital allocation

• Committed to double-digit EPS growth and 30%+ incremental margins, with 50-60 bps annual margin improvement and adjusted operating margin around 21%.

• Free cash flow conversion expected to remain above 100%, supporting dividend growth and capital deployment, with FY25 projection at ~115%.

• Capital allocation: ~1/3 of free cash flow to dividends, ~2/3 to share repurchases and M&A, with a mid-teens ROIC target by year five for acquisitions.

• Recent acquisitions (e.g., Richards, ERNI) have exceeded return expectations, expanding addressable markets and delivering strong returns and margin expansion.

• Manufacturing footprint now 76% localized, 90% supply chain in-region, supporting operational agility and cost efficiency.

Business developments and innovation

• AI/cloud business expected to more than double in two years, with infrastructure investments projected to triple content per chip and drive $3B+ revenue in five years.

• Energy business positioned for double-digit growth, leveraging grid hardening, renewables, and smart grid solutions, supported by M&A.

• Automotive content per vehicle to increase by 30% over five years, with strong growth in China and global expansion of Chinese OEMs; content per vehicle in China growing from $50 in 2019 to $87 in 2025.

• Investments in automation and advanced manufacturing enable rapid product launches and support high-volume, high-complexity customer needs.

• Continuous improvement in quality and service, with a goal to improve quality by another 50% over the next five years.