TEL Financial Analysis

Analysis Date: 1/24/2025

Business Model

TE Connectivity generates revenue through two main segments: Transportation Solutions and Industrial Solutions

Revenue Sources

• Transportation Solutions (58% of Q1 2025 revenue)
• Industrial Solutions (42% of Q1 2025 revenue)

Revenue Distribution by Channel

• Transportation Solutions: $2,243M in Q1 2025
• Industrial Solutions: $1,593M in Q1 2025

Income Statement Analysis

• Sales flat year-over-year at $3.84B with currency exchange headwinds
• Adjusted operating margin improved to 19.4%, up 30bps year-over-year
• Adjusted EPS grew 6% to $1.95 despite flat sales

Balance Sheet Analysis

• Strong balance sheet with $1.25B in cash
• Working capital management remains strong with improvements in DSO and DPO

Cash Flow Analysis

• Record Q1 free cash flow of $674M, up 18% year-over-year
• Strong operating cash flow of $878M, up 22% year-over-year

Capital Allocation

Returned approximately $500M to shareholders and deployed $325M for bolt-on acquisitions in Industrial segment during Q1 2025. Balanced approach between shareholder returns and strategic investments.

Management Commentary

Strong operational performance with adjusted EPS above guidance

Record first quarter adjusted operating margin at 19.4%

Double digit sales growth in Industrial segment

Currency exchange headwinds impacting reported results

Overall Sentiment: Positive with strong operational execution despite macro headwinds

Recommendation

Rating: Buy

Reason for Rating: Strong operational execution, margin expansion, and momentum in growth markets

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 9:05:25 AM