TE Connectivity Exceeds Expectations in Fiscal 2024, Boosts Share Repurchase Program by $2.5 Billion
TE Connectivity (TE Connectivity plc TEL), a global leader in industrial technology, announced impressive fourth-quarter and full-year fiscal 2024 results, exceeding analyst expectations and setting new records in key performance areas. The company showcased its commitment to delivering sustainable growth and maximizing shareholder value.
Strong Fourth-Quarter Performance
The fourth quarter ended on September 27, 2024, saw TE Connectivity surpass revenue guidance, achieving $4.1 billion in net sales, a 1% year-over-year increase on a reported basis and a 2% organic growth. While GAAP diluted earnings per share (EPS) from continuing operations dipped to $0.90, down 49% from the previous year, this was attributed to a one-time tax-related impact of $0.78. Excluding this impact, adjusted EPS reached an all-time high of $1.95, marking a 10% year-over-year increase.
Operational efficiency also played a key role in TE Connectivity’s success. Operating margins reached 16.0%, while adjusted operating margins hit a record 18.6% for the quarter, driven by strong operational performance and cost management. Cash flow from operating activities totaled approximately $1 billion, resulting in free cash flow of $833 million, with a significant $952 million returned to shareholders, demonstrating the company’s commitment to strong cash generation and disciplined capital deployment.
Record-Breaking Full-Year Performance
Fiscal 2024 saw TE Connectivity set new benchmarks across several key metrics. Net sales reached $15.8 billion, fueled by organic growth in the Communications and Transportation segments. GAAP operating margin reached a record 17.6%, while adjusted operating margin also achieved a record high of 18.9%. This performance underscored TE Connectivity’s ability to effectively navigate a dynamic market environment and expand margins.
The company also delivered record GAAP EPS of $10.34 and adjusted EPS of $7.56, a 12% increase from the previous year. Cash flow generation remained robust, with cash flow from operating activities reaching approximately $3.5 billion and free cash flow reaching $2.8 billion. Furthermore, TE Connectivity returned approximately $2.8 billion to shareholders and invested $340 million in a bolt-on acquisition, demonstrating its strategic focus on capital allocation and long-term growth.
Transportation Segment Highlights
TE Connectivity’s Transportation segment continued to drive impressive growth, with adjusted operating margin expanding to 20%, a testament to the company’s leading position in next-generation automotive technologies. The segment’s success can be attributed to its strong operational performance and ability to leverage its global reach in the rapidly evolving automotive industry.
Industrial Segment Growth
TE Connectivity’s Industrial segment demonstrated resilience, achieving growth in three out of four businesses. The company’s focus on innovation and providing solutions for key industries, such as energy, medical, and aerospace, continues to drive growth in this segment.
Communications Segment Momentum
The Communications segment saw strong momentum, with both growth and margin expansion. TE Connectivity is well-positioned to capitalize on the accelerating adoption of artificial intelligence (AI) programs, which is driving demand for connectivity and data management solutions.
Continued Share Repurchase Program Expansion
As a testament to its commitment to shareholder value, TE Connectivity’s board of directors authorized a $2.5 billion increase in its share repurchase program. This significant move underscores the company’s confidence in its future prospects and its willingness to utilize capital to further benefit its owners.
Positive Outlook for the Future
TE Connectivity anticipates continued momentum in fiscal 2025, projecting a year-over-year increase in first-quarter sales and adjusted EPS. The company plans to leverage its operational strengths and innovations in key growth areas, including electrification and data connectivity in transportation, renewable energy, and AI. The company’s commitment to its long-term value creation model remains unwavering.
First-Quarter Fiscal 2025 Outlook
For the first quarter of fiscal 2025, TE Connectivity expects net sales of approximately $3.9 billion. GAAP EPS from continuing operations is anticipated to be $1.64, while adjusted EPS is expected to be $1.88. The first-quarter guidance includes a $0.04 tax headwind compared to the prior year.
Organizational Realignment
TE Connectivity will now operate with two reportable segments – Transportation Solutions and Industrial Solutions, effective from fiscal 2025. This reorganization, announced in the fourth quarter of fiscal 2024, will further streamline the company’s operations and provide greater clarity for investors.
About TE Connectivity
TE Connectivity is a global industrial technology leader focused on creating a safer, sustainable, productive, and connected future. The company’s connectivity and sensor solutions enable the efficient distribution of power, signal, and data across various industries, including transportation, renewable energy, automated factories, data centers, and medical technology. With over 85,000 employees, including 8,000 engineers, TE Connectivity works closely with customers in over 130 countries, ensuring that EVERY CONNECTION COUNTS.
Key Takeaways:
* TE Connectivity exceeded revenue and earnings expectations in the fourth quarter and full year of fiscal 2024.
* The company achieved record operating margins, EPS, and cash generation, demonstrating its commitment to strong operational performance and disciplined capital management.
* TE Connectivity is well-positioned to benefit from long-term growth trends in electrification, data connectivity, and AI across various industries.
* The board of directors authorized a $2.5 billion increase in the share repurchase program, underscoring its confidence in the company’s future prospects and its commitment to shareholder value.
