TE Connectivity(US:TEL)2025-11-10 21:14Financial Performance - Fiscal 2025 net sales increased by 8.9% to $17,262 million compared to fiscal 2024, driven by a 23.7% increase in the Industrial Solutions segment[175] - Organic net sales growth for fiscal 2025 was 6.4%, with Richards Manufacturing contributing $179 million in net sales since its acquisition in April 2025[175] - Transportation Solutions segment net sales decreased by 1.0% to $9,388 million, primarily due to declines in sensors and commercial transportation markets[185] - Industrial Solutions segment net sales rose to $7,874 million, reflecting strong growth in digital data networks and energy markets[185] - Operating income for fiscal 2025 was $3,211 million, an increase of $415 million from fiscal 2024, resulting in an operating margin of 18.6%[196] - Operating income in the Transportation Solutions segment decreased by $62 million to $1,818 million in fiscal 2025, with an operating margin of 19.4%[205] - Organic net sales in the Automotive sector were flat in fiscal 2025, with growth of 11.3% in the Asia-Pacific region offset by declines in the EMEA and Americas regions[207] - Industrial Solutions segment net sales increased by $1,510 million, or 23.7%, in fiscal 2025 compared to fiscal 2024, driven by organic net sales growth of 17.6% and a 5.7% contribution from acquisitions[208] - Digital data networks saw organic net sales growth of 72.6% in fiscal 2025, primarily due to growth in AI and cloud applications[209] - The company reported a net loss of $197 million for fiscal 2025, an improvement from a net loss of $271 million in fiscal 2024[238] Expenses and Margins - Gross margin improved to 35.2% in fiscal 2025, up from 34.4% in fiscal 2024, with a gross margin increase of $623 million attributed to higher volume and improved productivity[188] - In fiscal 2025, selling, general, and administrative expenses increased by $134 million to $1,866 million, representing 10.8% of net sales[190] - Cost of sales for fiscal 2025 was $11,183 million, representing 64.8% of net sales, compared to 65.6% in fiscal 2024[188] - Acquisition and integration costs in fiscal 2025 totaled $47 million, with $28 million related to the acquisition of Richards Manufacturing[192] - Net restructuring charges were $126 million in fiscal 2025, down from $166 million in fiscal 2024, with expected annualized cost savings of approximately $80 million by the end of fiscal 2026[194] Cash Flow and Dividends - Cash provided by operating activities increased by $662 million to $4,139 million in fiscal 2025, attributed to higher pre-tax income and reduced income tax payments[219] - Cash dividends paid to shareholders were $2.72 per ordinary share in fiscal 2025, with a quarterly dividend of $0.71 declared for December 2025[175] - The board of directors declared a quarterly cash dividend of $0.71 per ordinary share, payable on December 12, 2025[232] - During fiscal 2025, the company repurchased approximately 8 million ordinary shares for $1,356 million, with $1.4 billion remaining under the share repurchase authorization[234] Acquisitions and Investments - The company acquired Richards Manufacturing for approximately $2.3 billion, enhancing its Industrial Solutions segment[179] - The company acquired Richards Manufacturing for approximately $2.3 billion in fiscal 2025, along with two additional businesses for a combined cash purchase price of $321 million[222] - Capital expenditures were $936 million in fiscal 2025, with expectations for fiscal 2026 capital spending to be approximately 5% of net sales[221] Debt and Financial Position - Total debt at fiscal year end 2025 was $5,694 million, an increase from $4,203 million in 2024[224] - The company has approximately $3.5 billion of cash and cash equivalents that are considered permanently reinvested in global operations[218] - Total current assets increased to $1,236 million in fiscal 2025 from $1,164 million in fiscal 2024, while total noncurrent assets rose to $2,465 million from $2,377 million[237] - Total contractual cash obligations at fiscal year end 2025 amounted to $8,597 million, including long-term debt principal payments of $5,753 million[243] - As of fiscal year end 2025, the ratio of Consolidated Total Debt to Consolidated EBITDA was compliant with the covenant, remaining below the threshold of 3.75 to 1.0[229] Tax and Deferred Assets - Income tax expense for fiscal 2025 was $1,361 million, with an effective tax rate of 42.5%, compared to a benefit of $397 million and an effective tax rate of (14.2)% in fiscal 2024[197] - The valuation allowance for deferred tax assets increased to $8,821 million in fiscal 2025 from $8,285 million in fiscal 2024[199] - The company has significant valuation allowances for deferred tax assets, which may impact future income tax expenses and earnings[263] - Changes in tax laws and rates could affect recorded deferred tax assets and liabilities, but no material changes are currently anticipated[264] - The company recognizes tax liabilities based on estimates of uncertainties in tax regulations across multiple jurisdictions[265] Pension and Retirement Plans - The company expects pension contributions to be approximately $70 million in fiscal 2026[220] - A 25-basis-point decrease in discount rates would increase the present value of pension obligations by $63 million, while a 25-basis-point increase would decrease it by $60 million[268] - At fiscal year end 2025, the long-term target asset allocation in U.S. plans is 25% return-seeking assets and 75% liability-hedging assets, with a current allocation of 67% return-seeking and 33% liability-hedging[270] - The funded status of defined benefit pension plans is measured as the difference between the fair value of plan assets and the projected benefit obligation[266] Market Risks and Hedging - The company utilizes established risk management policies to manage market risks associated with interest rates and foreign currency movements[283] - A 10% appreciation or depreciation of the underlying currency in cross-currency swap contracts would change the unrealized value of contracts by $594 million at fiscal year end 2025[285] - At fiscal year end 2025, commodity hedges related to expected purchases of gold, silver, copper, and palladium were in a net gain position of $80 million with a notional value of $569 million[290]