Core Insights - The company reported first-quarter sales of $4.7 billion, reflecting a 22% increase year-over-year on a reported basis and a 15% increase organically, with both segments contributing to sales exceeding guidance [1][20] - Record orders reached over $5 billion, with a book-to-bill ratio of 1.1, indicating strong momentum [1][6] - The company expects second-quarter sales to be $4.7 billion, representing a 13% year-over-year increase on a reported basis and a 6% increase organically [5][6] Sales and Growth - Sales growth is driven by new program awards from customers, showcasing the company's operational and engineering strengths [2][4] - The company anticipates growth in fiscal 2026 to exceed its long-term target of 6 to 8 points of annual average growth [2][21] - Adjusted earnings per share (EPS) for the first quarter were $2.72, up 33% year-over-year, with adjusted operating margins at 22%, an increase of 180 basis points from the previous year [5][20] Orders and Segments - Orders increased by over $1 billion year-over-year to $5.1 billion, with double-digit organic order growth across all regions [6][30] - The Industrial Solutions segment saw orders grow over 40% year-over-year, with significant contributions from digital data networks and AI revenue exceeding expectations [10][11] - The Transportation segment experienced an 11% increase in orders year-over-year, with growth in all businesses, particularly in commercial transportation [8][13] Financial Performance - The company generated free cash flow of over $600 million, returning 100% of this to shareholders while supporting future growth investments [5][20] - Adjusted operating income for the quarter was over $1 billion, with a GAAP operating income of $963 million [17][20] - The adjusted effective tax rate was approximately 22% for Q1, with expectations to maintain a similar rate in Q2 [18] Future Outlook - The company expects adjusted EPS for Q2 to be around $2.65, reflecting a 20% year-over-year growth [6] - Capital expenditures are projected to be closer to 6% of sales this year to support the growing pipeline of customer awards, particularly in AI programs [21][36] - The company anticipates continued strong performance in both segments, with Q1 results indicating a robust start to fiscal 2026 [21][22]

TE Connectivity logo 3 Stocks Quietly Leveraging AI While Everyone Chases NVIDIA TE Connectivity (NYSE:TEL) reported first-quarter fiscal 2026 results that management said reinforced the long-term strategy and growth framework it outlined at its Investor Day last quarter, pointing to broad-based demand tied to rising needs for data and power connectivity. The company posted double-digit growth in both operating segments, record quarterly orders, and record adjusted profitability, while raising its exp ...

Financial Data and Key Metrics Changes - The company reported first-quarter sales of $4.7 billion, representing a 22% increase on a reported basis and a 15% increase organically year over year [7][20] - Adjusted earnings per share (EPS) reached a record of $2.72, up over 30% compared to the previous year [8][20] - Adjusted operating margins improved to 22%, an increase of 180 basis points year over year [8][20] - Free cash flow exceeded $600 million, with 100% returned to shareholders [8][20] Business Line Data and Key Metrics Changes - Industrial Solutions segment sales grew 38% year over year, with a 26% organic increase [11] - Digital Data Networks (DDN) experienced a remarkable 70% growth year over year, driven by strong AI revenue expectations [12] - Transportation Solutions segment sales increased by 10%, with organic growth of 7% year over year [15] Market Data and Key Metrics Changes - Orders increased to a record level of over $5 billion, reflecting a growth of more than $1 billion compared to the prior year [5][9] - Double-digit organic order growth was observed in all regions year over year [9] - The company expects global auto production to be approximately 88 million units for fiscal 2026, slightly down from the previous year [16][78] Company Strategy and Development Direction - The company is focusing on broadening growth drivers to capitalize on secular trends in data and power connectivity [4] - Investments in co-creation engineering models and global supply chain enhancements are expected to drive value for customers [4] - The long-term target is to achieve six to eight points of annual average growth, with expectations to exceed this in fiscal 2026 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver growth ahead of the long-term target, supported by strong order momentum [7][21] - The company is experiencing ongoing macroeconomic challenges but continues to execute well, achieving record adjusted operating margins [6][21] - Management highlighted the importance of AI and data connectivity as key growth drivers for the future [10] Other Important Information - The company plans to increase capital expenditures to support the growing pipeline of customer awards for AI programs, expecting CapEx to be closer to 6% of sales this year [20] - The adjusted effective tax rate for Q1 was approximately 22%, with expectations to remain at this level for Q2 [19] Q&A Session Summary Question: AI revenue forecast increase - Management confirmed an increase in AI revenue expectations by $200 million compared to previous forecasts, driven by new program awards and strong customer demand [28][29] Question: Order trends and revenue implications - Management noted that orders were up significantly, with strong growth across various segments, but acknowledged a typical seasonal decline in auto production affecting revenue guidance [34][36] Question: Drivers of AI revenue uptick - The increase in AI revenue expectations is attributed to new program awards and existing programs performing better than anticipated [40][42] Question: Supply chain tightness and inflation - Management indicated that while there is inflation in metal-related components, they are able to procure necessary materials and pass costs through to customers [62][71] Question: Commercial transportation outlook - Management acknowledged that while last year's first quarter was an easier comparison, they expect continued growth in commercial transportation driven by improvements in markets outside North America [66][68] Question: EPS guidance and operating income items - Management explained that the slight decrease in EPS guidance is due to tax and higher interest expenses, but they remain confident in maintaining strong incremental margins [69][70]

Financial Data and Key Metrics Changes - The company reported first-quarter sales of $4.7 billion, representing a 22% increase on a reported basis and a 15% increase organically year-over-year [7][20] - Adjusted earnings per share (EPS) reached a record $2.72, up over 30% compared to the previous year [8][20] - Adjusted operating margins improved to 22%, an increase of 180 basis points year-over-year [8][20] - Free cash flow exceeded $600 million, with 100% returned to shareholders [8][20] Business Line Data and Key Metrics Changes - Industrial Solutions segment sales grew 38% year-over-year, with digital data networks experiencing a 70% growth [11][12] - Transportation Solutions segment sales increased by 10%, with auto sales growing 7% organically [15][16] - The Energy business saw sales grow 88%, including contributions from the Richards acquisition, with organic growth of 15% [14] Market Data and Key Metrics Changes - Orders increased to a record level of over $5 billion, with a book-to-bill ratio of 1.1 [6][9] - Double-digit organic order growth was observed in all regions year-over-year [9][10] - The company expects global auto production to be approximately 88 million units for fiscal 2026, slightly down from the previous year [16][94] Company Strategy and Development Direction - The company is focusing on broadening growth drivers to capitalize on secular trends in data and power connectivity [5][6] - Investments in co-creation engineering models and global supply chain enhancements are aimed at driving product innovation and value for customers [5][6] - The long-term target is to achieve six to eight points of annual average growth, with expectations to exceed this in fiscal 2026 [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver growth ahead of the long-term target, supported by strong order momentum and improved operating resilience [6][7] - The company anticipates continued strong cash generation and margin expansion, with a focus on AI and digital data networks as key growth areas [6][20] - Management acknowledged ongoing macroeconomic challenges but emphasized strong execution and operational performance [6][7] Other Important Information - The company plans to increase capital expenditures to support the growing pipeline of customer awards for AI programs, expecting CapEx to be closer to 6% of sales this year [21][22] - The adjusted effective tax rate for Q1 was approximately 22%, with expectations to remain at this level for Q2 [19] Q&A Session Summary Question: AI revenue expectations and scaling - Management confirmed an increase in AI revenue expectations by $200 million compared to previous forecasts, driven by new program awards and strong order momentum [26][28] Question: Order trends and revenue implications - Management highlighted record orders and broad-based growth across segments, with expectations for sequential growth in Industrial Solutions despite typical auto production declines [34][36] Question: Drivers of AI revenue uptick - The increase in AI revenue expectations is attributed to new program awards and strong performance from existing programs, with significant investments needed to meet growing demand [41][42] Question: Supply chain tightness and inflation - Management indicated that while there is inflation in metal-related costs, they are able to procure necessary materials and pass costs through to customers effectively [62][63] Question: Commercial transportation outlook - Management noted that while last year's comparisons were easier, there is ongoing improvement in global truck builds outside North America, with expectations for continued growth [70][71] Question: EPS guidance and operating margins - Management explained that the slight decrease in EPS guidance is due to tax and interest expenses, while maintaining confidence in strong incremental margins for the year [73][75]

Financial Data and Key Metrics Changes - TE Connectivity reported first quarter sales of $4.7 billion, representing a 22% increase on a reported basis and a 15% increase organically year over year [6][18] - Adjusted earnings per share (EPS) reached a record $2.72, up over 30% compared to the previous year [7][18] - Adjusted operating margins improved to 22%, an increase of 180 basis points year over year [7][18] - Free cash flow exceeded $600 million, with 100% returned to shareholders [8][18] Business Line Data and Key Metrics Changes - The Industrial Solutions segment saw sales growth of 38% year over year, with a 26% organic increase [11] - Digital Data Networks experienced a remarkable 70% growth year over year, driven by strong demand for AI applications [12] - The Energy business reported an 88% increase in sales, including contributions from the Richards acquisition, with organic growth of 15% [13] - The Transportation segment's sales grew 10% year over year, with organic growth of 7% [14] Market Data and Key Metrics Changes - Orders increased to a record level of over $5 billion, reflecting a growth of more than $1 billion compared to the prior year [5][9] - Double-digit organic order growth was observed across all regions year over year [9] - The automotive market is expected to see a production decline of approximately 3 million units from Q1 to Q2, impacting the Transportation segment [55] Company Strategy and Development Direction - The company is focused on broadening growth drivers to capitalize on secular trends in data and power connectivity [4] - TE Connectivity aims for double-digit EPS growth and strong cash generation, with a long-term target of 6-8% annual average growth [5][6] - Investments in co-creation engineering models and global supply chain enhancements are expected to drive product innovation and value for customers [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth ahead of the long-term target for fiscal 2026, supported by strong order momentum [6][19] - The company anticipates continued strong performance in the Industrial Solutions segment, while acknowledging typical seasonality impacts in the Transportation segment [9][55] - Management highlighted the importance of ongoing investments in capacity to meet growing demand, particularly in AI and energy sectors [30][51] Other Important Information - The company expects capital expenditures to be closer to 6% of sales this year to support the growing pipeline of customer awards for AI programs [18] - Inflationary pressures on metal prices are being managed through pricing strategies, with no significant impact on margins expected [47][49] Q&A Session Summary Question: AI revenue expectations and scaling - Management confirmed an increase in AI revenue expectations by $200 million compared to previous forecasts, driven by new program awards and strong order momentum [20][22][29] Question: Order trends and revenue implications - Management noted record orders of over $5 billion, with strong growth across various segments, although automotive production patterns may affect revenue guidance [25][55] Question: Supply chain and inflation impacts - Management indicated that while there are inflationary pressures, they are able to pass costs through to customers effectively, and capacity remains adequate to meet demand [40][49] Question: Commercial transportation outlook - Management acknowledged that while last year's comparisons were easier, they expect continued growth in commercial transportation driven by improvements in Asia and Europe [42] Question: Incremental margins and segment performance - Management expects both segments to achieve or exceed the 30% incremental flow-through target for the full year, despite some quarterly variations [57]

Q1 2026 Performance Highlights - Sales reached $4.7 billion, a 22% increase reported and a 15% increase on an organic basis year-over-year[7] - Orders hit a record $5.1 billion, up 28% year-over-year and 9% sequentially, resulting in a book-to-bill ratio of 1.1[7] - Adjusted operating margins expanded by 180 basis points year-over-year to 22%, driven by strong operational performance[7] - Adjusted EPS increased by 33% year-over-year to $2.72[7] - Strong free cash flow generation of $608 million, with approximately 100% returned to shareholders[7] Q2 2026 Guidance - Expect sales of approximately $4.7 billion, representing a 13% increase reported and a 6% increase organically year-over-year[7] - Adjusted EPS is projected to be around $2.65, a 20% increase year-over-year[7] Segment Performance - Industrial Solutions (Q1 2026) - Sales were $2.202 billion, up 38% reported and 26% organically[13] - Adjusted operating margin expanded by 520 basis points to 23.3%[13] - Digital Data Networks (DDN) sales increased by 71% reported and 70% organically[15] Segment Performance - Transportation Solutions (Q1 2026) - Sales were $2.467 billion, up 10% reported and 7% organically[18] - Adjusted operating margin was 21.2%[18] - Automotive sales increased by 10% reported and 7% organically[18]

Financial Performance - Net sales for the first quarter were $4.7 billion, representing a 22% increase year over year, with 15% organic growth[6] - GAAP diluted EPS from continuing operations was $2.53, a 45% increase year over year, while adjusted EPS was $2.72, up 33% year over year[6] - GAAP operating margin improved to 20.6%, an increase of 260 basis points year over year, and adjusted operating margin expanded to 22.2%, up 180 basis points[6] - Record orders reached $5.1 billion, marking a 28% increase year over year and a 9% sequential increase[6] - Total net sales for the quarter reached $4,669 million, representing a 21.7% growth compared to $3,836 million in the prior year[31] - Operating income increased to $963 million with an operating margin of 20.6%, compared to $690 million and 18.0% in the previous year[31] - For the year ended September 26, 2025, TE Connectivity achieved total operating income of $3,211 million, adjusted to $3,584 million[39] - The operating margin for the year ended September 26, 2025, was 18.6%, adjusting to 20.8%[39] - Diluted earnings per share from continuing operations for the year ended September 26, 2025, was reported at $6.16, adjusted to $9.27[39] Cash Flow and Shareholder Returns - Cash flow from operating activities was $865 million, with free cash flow of $608 million, and $615 million returned to shareholders[6] - Free cash flow for the quarter was $608 million, down from $674 million in the same quarter last year[29] - The company repurchased ordinary shares worth $405 million during the quarter, up from $303 million in the previous year[28] Future Outlook - The company expects second quarter sales of approximately $4.7 billion, a 13% increase year over year, and adjusted EPS of approximately $2.65, up 20% year over year[8] - The outlook for the quarter ending March 27, 2026, includes an expected diluted earnings per share from continuing operations of $2.26, adjusted to $2.65[41] - TE Connectivity anticipates a net sales growth of 13.4% for the quarter ending March 27, 2026, with organic net sales growth projected at 6.2%[41] Segment Performance - Transportation Solutions segment net sales were $2,467 million, up 10.0% from $2,243 million, while Industrial Solutions segment net sales rose to $2,202 million, a 38.2% increase from $1,593 million[31] Expenses and Taxation - Research, development, and engineering expenses were $225 million, up from $188 million year over year[25] - The effective tax rate for the quarter was 21.9%, with income from continuing operations reported at $751 million[33] - The effective tax rate for the quarter ended March 28, 2025, was reported at 98.3%, significantly higher than the adjusted rate of 22.2%[37] - The company reported a significant income tax expense of $1,361 million for the year ended September 26, 2025, impacting overall profitability[39] Assets and Liabilities - The company reported a total of $8,368 million in current assets, an increase from $7,966 million in the previous quarter[27] - Total liabilities increased to $12,416 million from $12,351 million in the prior quarter[27] Capital Expenditures - Capital expenditures for the quarter were $258 million, compared to $205 million in the same quarter last year[28] Accounting Changes - The company is excluding amortization expense on intangible assets from its non-GAAP financial measures starting in fiscal 2026[9]

Core Viewpoint - TE Connectivity Ltd. (TEL) provided its financial outlook for the second quarter, projecting earnings and sales figures that indicate continued growth in the industrial sector [1]. Financial Outlook - For the second quarter, TE Connectivity expects earnings from continuing operations of approximately $2.26 per share and adjusted earnings of about $2.65 per share [1]. - The company anticipates net sales of around $4.7 billion, with an organic sales growth of 6 percent [1]. Analyst Expectations - Analysts, on average, forecast earnings of $2.62 per share and revenues of $4.74 billion for the same quarter, typically excluding special items [2].

Core Viewpoint - TE Connectivity projected second-quarter profit above Wall Street estimates, driven by increased demand for AI-related tools and products [1] Company Summary - TE Connectivity is an electronic component maker that is experiencing a surge in demand for its AI-related offerings [1]

TE reports fiscal first-quarter earnings per share of $2.72 on sales of $4.7 billion. Wall Street was looking for EPS of $2.54 from sales of $4.5 billion. ...