TE Connectivity Q2 Earnings & Revenues Beat Estimates, Increase Y/Y

Core Insights - TE Connectivity (TEL) reported adjusted earnings of $2.10 per share for Q2 fiscal 2025, exceeding the Zacks Consensus Estimate by 7.14% and reflecting a 12.9% increase year-over-year [1] - Net sales reached $4.1 billion, surpassing consensus estimates by 4.66% and showing a 4% year-over-year growth, driven by the Industrial segment [1] - Orders totaled $4.25 billion, marking a 6% increase both year-over-year and sequentially [1] Revenue Breakdown - The Transportation solutions segment generated revenues of $2.31 billion, accounting for 55.9% of net sales, but declined 3.9% year-over-year on a reported basis and 2% organically [2] - Automotive sales saw a 2% decline year-over-year, with sensor sales down 12% and commercial transportation sales dropping 7%, attributed to weakness in industrial end markets in Europe and North America [3] - The Industrial Solutions segment reported revenues of $1.83 billion, representing 44.1% of net sales, with a 17% year-over-year increase on a reported basis and 16% organically [3] - Digital Data Networks, Automation & Connected Living, Aerospace, Defense and Marine, and Energy segments grew by 77%, 2%, 9%, and 19% year-over-year, respectively, while Medical experienced a 14% decline [4] Operating Performance - GAAP gross margin expanded by 90 basis points year-over-year to 35.2% [5] - Selling, general and administrative expenses as a percentage of revenues decreased by 20 basis points year-over-year to 11% [5] - Research, development, and engineering expenses as a percentage of revenues increased by 30 basis points to 4.9% [5] - Adjusted operating margin improved by 60 basis points year-over-year to 18.1% [5] Financial Position - As of March 28, 2025, cash and cash equivalents were $2.55 billion, up from $1.25 billion as of December 27, 2024 [6] - Long-term debt was $3.26 billion as of March 28, 2025, slightly down from $3.29 billion as of December 27, 2024 [6] - Cash generated from operations was $0.7 billion in the reported quarter, down from $0.9 billion in the previous quarter [6] - Free cash flow for the second quarter was $424 million, a decrease from $674 million in the previous quarter [6] Future Guidance - TE Connectivity provided positive guidance for Q3 fiscal 2025, expecting net sales to increase by 8% year-over-year to $4.3 billion [7] - Adjusted earnings are projected to be $2.06 per share, indicating an 8% year-over-year growth [8] - The Zacks Consensus Estimate for Q3 fiscal 2025 net sales is $4.13 billion, suggesting a 3.92% growth compared to the previous year [8]