TE Connectivity Reports Q1 Fiscal 2025 Results with Increased Net Sales but Decreased Net Income

TE Connectivity plc reported its financial results for the first quarter of fiscal 2025, ending December 27, 2024, revealing net sales of $3.836 billion, a slight increase from $3.831 billion in the same period last year. The company achieved a gross margin of $1.36 billion, up from $1.32 billion, reflecting a gross margin percentage of 35.5%, compared to 34.6% in the prior year. However, net income significantly decreased to $528 million, down from $1.803 billion, resulting in basic earnings per share of $1.77, compared to $5.80 in the previous year.

The financial performance indicates a notable shift in profitability, primarily attributed to a substantial income tax expense of $178 million this quarter, contrasting with a tax benefit of $1.105 billion in the prior year. The company also incurred restructuring and other charges totaling $50 million, up from $21 million a year ago, as part of ongoing efforts to optimize its operations. The restructuring charges were primarily related to footprint consolidation and cost structure improvements across both segments.

In terms of strategic developments, TE Connectivity completed two acquisitions during the quarter for a total cash purchase price of $325 million, enhancing its Industrial Solutions segment. The company also underwent a significant organizational change, merging its former parent entity, TE Connectivity Ltd., with its wholly-owned subsidiary, TE Connectivity plc, which is now incorporated in Ireland. This restructuring aligns with the company's fiscal 2025 strategy, consolidating its operations into two reportable segments: Transportation Solutions and Industrial Solutions.

Operationally, the company reported a decrease in sales within the Transportation Solutions segment, which fell by 6.3% to $2.243 billion, driven by declines across all end markets, particularly in automotive and commercial transportation. Conversely, the Industrial Solutions segment saw a 10.8% increase in sales to $1.593 billion, bolstered by growth in digital data networks and aerospace, defense, and marine markets. The company’s cash flow from operating activities was $878 million, an increase from $719 million in the previous year, indicating improved working capital management.

Looking ahead, TE Connectivity anticipates net sales of approximately $3.95 billion for the second quarter of fiscal 2025, slightly lower than the $3.97 billion reported in the same quarter last year. The company expects continued sales declines in the Transportation Solutions segment to be offset by growth in the Industrial Solutions segment. However, it also cautioned about the potential impact of new global minimum corporate tax regulations, which may necessitate a reduction of approximately $600 million in net deferred tax assets in the upcoming quarter.