TE Connectivity Ltd. ((TEL)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, TE Connectivity Ltd. showcased a robust financial performance marked by record-breaking sales and significant growth, particularly in the Industrial segment and AI revenue. The company demonstrated positive cash flow and strategic capital deployment, although it acknowledged challenges in the Western automotive markets and North American commercial transportation sectors.
Record-Breaking Revenue and Growth
TE Connectivity reported an impressive fourth-quarter sales figure of $4.75 billion, marking a 17% increase on a reported basis and an 11% organic growth year-over-year. The full-year sales also reached a record $17.3 billion, with reported growth of 9% and organic growth of 6%.
Strong Performance in Industrial Segment
The Industrial segment was a standout performer, growing 34% in the quarter and 24% organically. Notably, the Digital Data Networks (DDN) achieved an 80% year-over-year growth, while the Energy business sales surged by 83%. The Automation and Connected Living business also saw an 11% organic increase.
Significant AI Revenue Surge
AI revenue experienced a remarkable surge, tripling to over $900 million in fiscal 2025. This growth reflects the increasing momentum and demand in hyperscaler platforms.
Robust Cash Flow and Capital Deployment
TE Connectivity generated over $3 billion in free cash flow with more than 100% conversion. The company returned over $2 billion to shareholders and invested $2.6 billion in bolt-on acquisitions, showcasing its strategic capital deployment.
Challenges in Western Automotive Markets
Despite overall growth, the company faced a 4% decline in automotive sales in Western regions, attributed to ongoing production challenges. However, growth was driven by an 11% increase in Asia.
Weakness in North American Commercial Transportation
The North American commercial transportation sector exhibited ongoing weakness, which offset the growth seen in Europe and Asia within the segment.
Mixed Performance in Sensors Business
The Sensors business experienced weakness in Western regions, partially offset by growth in Asia, indicating a mixed performance in this segment.
Positive Outlook for Fiscal 2026
Looking ahead, TE Connectivity projects first-quarter fiscal 2026 sales to reach $4.5 billion, reflecting a 17% year-over-year increase. The company anticipates adjusted earnings per share to grow by 23% year-over-year, indicating a positive outlook despite macroeconomic challenges.
In conclusion, TE Connectivity’s earnings call highlighted a strong financial performance with record sales and growth, particularly in the Industrial segment and AI revenue. Despite facing challenges in specific markets, the company’s positive cash flow and strategic capital deployment underscore its resilience and forward momentum.