TE Connectivity(US:TEL)2025-10-29 13:32Financial Data and Key Metrics Changes - The company reported fourth quarter sales of $4.75 billion, growing 17% year-over-year and 11% organically, exceeding guidance [7] - Full year sales reached a record $17.3 billion, up 9% on a reported basis and 6% organically [9] - Adjusted earnings per share (EPS) for the fourth quarter was $2.44, a 25% increase compared to the previous year [7] - Adjusted operating margins were 20%, an increase of 130 basis points year-over-year [8] - Free cash flow for the fourth quarter was $1.2 billion, contributing to a total of over $3 billion for the full year [9] Business Line Data and Key Metrics Changes - The industrial segment saw reported growth of 24%, with organic growth of 18%, driven by demand in artificial intelligence and energy infrastructure applications [8] - Transportation orders increased by 9% year-over-year, with auto growth in all regions [10] - The Digital Data & Devices segment grew 80% year-over-year, reflecting strong demand from hyperscaler platforms [13] Market Data and Key Metrics Changes - Orders for the fourth quarter totaled $4.7 billion, a 22% increase year-over-year [7] - Organic order growth was observed across all regions, with significant contributions from automotive and energy sectors [10] - The company expects global auto production to remain stable at 87 million-88 million units in fiscal 2026, with content growth driven by electrification and data connectivity [11] Company Strategy and Development Direction - The company aims to continue executing its long-term value creation model, with a focus on operational resilience and strategic positioning in growth sectors [6] - The upcoming Investor Day event is expected to provide further insights into growth opportunities and the company's value creation model [5][22] - The company is making changes to its non-GAAP reporting to better reflect cash profitability, which may influence future M&A strategies [21][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong performance despite an uneven macro environment, with expectations for double-digit growth in the first quarter of fiscal 2026 [6][9] - The company anticipates continued momentum in AI and cloud-related revenues, with a projected run rate of $1.5 billion [60] - Management noted that while there are challenges in certain markets, overall demand trends appear to be stabilizing [41][44] Other Important Information - The company returned over $2 billion to shareholders and invested $2.6 billion in bolt-on acquisitions during the year [9][20] - Adjusted effective tax rates are expected to be approximately 22% for the first quarter of fiscal 2026 [18] Q&A Session Summary Question: AI revenue growth and future forecasts - Management confirmed AI sales reached over $900 million in fiscal 2025, with expectations for continued growth driven by strong orders and design wins [27] Question: Capital expenditures for fiscal 2026 - Management indicated that capital expenditures would likely remain in line with previous years, supporting growth initiatives [36] Question: Trends in end markets and demand changes - Management noted stability in transportation orders and consistent growth in industrial segments, with some regional disparities [41][44] Question: Margins and profitability concerns - Management addressed concerns about margins, indicating that operational performance remains strong despite some noise from tariff pricing [90] Question: Market share dynamics in AI - Management emphasized the importance of technology and co-designing with customers to capture market share in the competitive AI landscape [95]