TE Connectivity Earnings Surpass Estimates in Q1, Increase Y/Y

Core Viewpoint - TE Connectivity (TEL) reported a mixed performance in its first-quarter fiscal 2025 results, with adjusted earnings per share (EPS) beating estimates but net sales missing expectations due to currency exchange challenges [1][2]. Financial Performance - Adjusted EPS for the first quarter was $1.95, a 6% increase year-over-year, surpassing the Zacks Consensus Estimate by 3.17% [1] - Net sales reached$ 3.84 billion, which was unchanged year-over-year but fell short of the consensus estimate by 1.92% [2] - The company anticipates a slight decline in net sales for the second quarter, projecting $3.95 billion, a decrease of 0.5% year-over-year, while adjusted EPS is expected to grow by 5% to$ 1.96 [3] Segment Performance - The Transportation Solutions segment generated $2.24 billion, accounting for 58.5% of total net sales, but saw a decline of 6.3% year-over-year [4] - Automotive sales within this segment decreased by 4% year-over-year [4] - The Industrial Solutions segment reported revenues of$ 1.59 billion, representing 41.5% of net sales, with an 11% year-over-year increase [5] - Within the Industrial Solutions segment, Digital Data Networks and Aerospace, Defense and Marine saw significant growth of 48% and 15% respectively, while Medical experienced a decline of 25% [6] Operating Metrics - GAAP gross margin improved by 90 basis points year-over-year to 35.5% [7] - Selling, general and administrative expenses increased to 11.1% of revenues, up 10 basis points year-over-year [7] - Adjusted operating margin expanded by 30 basis points to 19.4% [7] Balance Sheet and Cash Flow - As of December 27, 2024, cash and cash equivalents were $1.25 billion, down from$ 1.32 billion at the end of the previous quarter [8] - Long-term debt slightly decreased to $3.29 billion [8] - Cash generated from operations was$ 0.9 billion, down from $1 billion in the previous quarter, and free cash flow was$ 674 million, down from $833 million [8]