TEL Q1 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall

Core Insights - TE Connectivity (TEL) reported first-quarter fiscal 2026 adjusted earnings of $2.72 per share, a 39.5% increase from the previous year, surpassing the Zacks Consensus Estimate by 7.09% [1][8] - Net sales reached $4.67 billion, exceeding the consensus estimate by 3.62% and reflecting a 22% increase year over year, with a 15% organic growth [2][8] - Orders rose to $5.1 billion, marking a 28% year-over-year increase and a 9% sequential rise, with a book-to-bill ratio of 1.1 compared to 1.05 in the prior year [2] Segment Performance - The Transportation solutions segment generated revenues of $2.47 billion, accounting for 52.8% of net sales, with a 10% year-over-year increase [3] - Automotive sales in the Transportation segment grew by 7% year over year, while commercial transportation sales surged by 16% [4] - The Industrial Solutions segment reported revenues of $2.20 billion, also 52.8% of net sales, with a 38% year-over-year increase [5] Operating Metrics - GAAP gross margin expanded by 180 basis points to 37.2%, while adjusted operating margin also increased by 180 basis points to 22.2% [6] - Selling, general, and administrative expenses rose to 11.5% of net sales, an increase of 40 basis points [6] Financial Position - As of December 26, 2025, cash and cash equivalents stood at $1.25 billion, with long-term debt at $4.86 billion [7] - TE Connectivity generated $865 million in cash from operations during the quarter, a decrease from $1.4 billion in the previous quarter [7][9] Future Guidance - For the second quarter of fiscal 2026, TE Connectivity anticipates net sales to increase by 13% year over year, projecting adjusted earnings of $2.65 per share, indicating a 20% growth [10]