TE Connectivity (TEL) Q1 2025 earnings summary

Executive summary

• Q1 FY25 net sales were $3.84B, flat year over year, with Industrial Solutions growth offsetting Transportation Solutions declines and currency headwinds impacting results.

• Adjusted EPS was $1.95, up 6% year over year and above guidance; GAAP EPS was $1.75, reflecting $0.20 in charges and the absence of prior-year tax credits.

• Orders reached $4.0B, up year over year and sequentially, with a book-to-bill ratio of 1.05, driven by Industrial and AI program momentum.

• Record Q1 free cash flow of $674M, up 18% year over year; $878M in operating cash flow; ~$500M returned to shareholders and $325M used for bolt-on Industrial acquisitions.

• Named to the Dow Jones Sustainability Index for the 13th consecutive year.

Financial highlights

• Adjusted operating margin set a record at 19.4%, up 30 basis points year over year; GAAP operating margin was 18%.

• Adjusted operating income was $745M; GAAP operating income was $690M.

• Free cash flow was $674M, up from $570M in the prior year; cash and cash equivalents at quarter end were $1.25B.

• Adjusted EBITDA was $931M with a margin of 24.3%.

• Currency exchange headwinds impacted Q1 sales by $50M and are expected to exceed $300M for FY25.

Outlook and guidance

• Q2 FY25 sales expected at ~$3.95B, with adjusted EPS of ~$1.96, up 5% year over year, despite a $0.06 headwind from currency and tax.

• GAAP EPS for Q2 expected at $(0.05) due to a one-time non-cash tax charge; organic net sales growth projected at 1.3%.

• Full-year adjusted effective tax rate expected at 23%-24%, mainly due to Pillar Two global minimum tax.

• All businesses in the Industrial segment are expected to grow sequentially on an organic basis in Q2.

• Foreign currency expected to negatively impact Q2 sales by $110M-$112M and EPS by $0.01-$0.06.