TEL - Earnings call transcript Q1 2025

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Operator

Everyone, thank you for standing by, and welcome to the TE Connectivity First Quarter Earnings Call for Fiscal Year 2025. [Operator Instructions] And as a reminder, today's call is being recorded. I would now like to turn the conference over to our host, Vice President of Investor Relations, Sujal Shah. Please go ahead.

Sujal Shah

Good morning, and thank you for joining our conference call to discuss TE Connectivity's first quarter results and outlook for our second quarter of fiscal 2025. Chief Mitts. Terrence are Financial and today Heath Officer, me Executive Curtin; Officer, Chief With

call, will forward-looking this ask in During we press you and forward-looking today's to we information, review the release. cautionary included be statements providing certain

related use measures press the will and along this be that accompanying tables, you review slide non-GAAP ask release our of the our the discussion presentation our In addition, Investor sections slide certain of press website the in The presentation, we in to use te.com. found and these Relations morning, items. we of release portion with address at and can the

the reorganized fiscal Solutions, which same; As we into a from of X-segment adds the the XXXX: X structure reminder, where effective businesses Solutions, start remain and with Transportation communications. Industrial a end-markets the

talk in discussed call Instructions] our recast Terrence As opening structure. the will results refer the for over filed new new our financial in we they to turn structure. comments. the December let for me Please under X-K today, be to about information Now segment [Operator

Terrence Curtin

you, Sujal. Happy our and quarter want joining to you I Year to Yes, thank everyone, first New thank call. earnings first for And off say

uneven straightforward. first what as our to is that this very on where we we think we about aware, for to you the are is as Within focus we noise XXXX. of uncertainty all is financial creating delivered and As well weakness. control XXXX. through backdrop, we of pockets what's be global our and team in are execute strength well, performing continue pockets an economy see Global the key move to can economic we're drive But improvement quarter results

in sales On organically our line the expectations. top line, with our were

the our operating margin by was cash quarter, flow free record and of records adjusted guidance, all for ahead of driven and execution our the a Our our teams. and were EPS

that in which sequentially, through our both in and were sequential as as year. our Industrial guidance for further the dollar, of impact control this in quarter of free area were the go team's year-over-year proud we our growth as well will not gives cash of and slightly ahead top with and us we the us the expectations stronger second year. expectations. a one was orders performance improvement line accelerated segment confidence our Our Solutions in and impact that which our in I was earnings through expectations to The am line flow above our our deliver what

X remain dynamic, areas Now as that key environment reiterate we're to I focused this we to want expect on.

And architectures, customers innovation. sensing perspective is what unevenness that one innovate first The is we enabler. even and on to continuing next-generation a from connectivity our do with key we the and a are see,

growth. them, support ramping We for programs, going about as And hear they're application customers. to their such vehicle to hardening supporting the effort applications drive continued whether our monitoring programs are as well next-generation the high-speed architecture, energy secular connectivity AI of AD&M infrastructure, and drivers ramps key to in you're as

sure we're our making on expansion, results to guidance. first The as margin further second drive executing this quarter adjusted our as see is we're you focused operational that thing the important on on well that's levers and

opportunities we well And drive cash we've we will lastly, where we've optionality as fourth -- continuing that Thirdly, on how invested our to exercised owners been that global localizations returning done, tariff includes M&A area playbook subject, lot implemented. making need is from our customers of occur. One that Plus cycle, And as China tariff during also benefit generation working a this to on sure an are strong we've our deploy and capital XXXX our enables strategy. bolt-on we if the is they that key, and we we're prepared the the to in, as the tariffs strategies. really manufacturing so do and capitalizing And on model

So with an that get into as overview, to the presentation. I'd like

you our and me then some let guidance X, additional discuss second If provide highlights quarter, and the move and for Heath details. Slide further can to will

the first growth Orders billion, were intelligence said And segment, prior were broader quarter as per $X.XX Our increased X% segments. flat earnings And guidance both over in expected. basis I Industrial grew up This ahead including programs. year share year-over-year. than a $X.XX points operating Adjusted and XX quarter and of $X XX.X%, momentum we versus of sales up were margins sequentially. at the this was up slightly within year-over-year better first the our in last artificial both record of reflects year. earlier, which billion and was adjusted in

delivered billion. our by which the unfavorable is X% $X.XX the quarter for $XXX cash be sales sequentially of quality a Adjusted increase year-over-year year. We expected currency will basis, quarter share up earnings in per up tax versus financials impacted the flow of second to prior to and million, expecting Stepping expect this currency was away year-over-year, we be over second. we and headwind exchange a headwinds this this be million. And $X.XX free to $XXX exchange earnings. demonstrates includes quarter On second and record And are year-over-year. look of from from around to forward, XX% we our the high a first as $X.XX,

value to also this year. to the sustainable We owners. This Sustainability Index are customers that to the is to quarter practices dedication our demonstrate business by Jones our XXth be pleased Dow consecutive expected in for continues and designation provides included our

by So trends Transportation billion on In into in we growth orders as Industrial In that segment, in quarter. expected, orders was In were X. our Asia order production. saw the When in and offsetting weakness in car let the Slide orders sequential driven with second up basis, and XX% look you the and of on end-markets. for in a decline get the transportation orders western as while see organic auto overview, can in softness in growth was sequential for Transportation, book-to-bill came sensor $X commercial the quarter, and came segment, me X.XX. supporting that our segment, orders the we at you continued reflecting outlook our growth sales as it an our expected,

segment. to Turning Industrial the

All of over a book-to-bill had our business our quarter, X the supports in outlook. growth it and

growth stabilization to in about We are as automation talked applications, are Digital energy just marine this the and factory total our which over connected see for We've artificial also aerospace, when in as to And in living exceeds automation we to continuing our and to intelligence sales Data at is defense in up and last for billion, in about. $X.X you quarters, the our business X highlight, growth continuing. you us Networks you indicating X talked orders in quarters last our end-markets. business orders that the momentum sets look well and this

year-over-year into results, get start with me Transportation let X. Now segment I'll on Slide and

X% auto Our and offset quarter, business performed as by Asia the strong organically expected declines in in growth being down we with in was first western regions.

forward, of auto to the fiscal X% for look range we in to to be expect we to the content down to and year. be low at X% growth production we As end XXXX, the expect to our continue X- global X-point continue

Asia overall are production, growth of with this positioned. this we in that production continued now to EV expect While production we and decline expect roughly occurring year where growth year, hybrid XX% we strongly auto in

the data of also more by what platform new powertrain get architectures, increased We wins that require their and share the electrification $X leading realize in content we're connectivity connectivity is for which vehicle expect us. further content of impact momentum we just seeing really benefits, a auto driven OEM when Chinese and to completely And vehicle, I'll secured provide entirely design growth around next-generation the with software-defined electrification car. that's you, you give And we're you billion seeing, over for agnostic. of data momentum and with

our me the by expect turn weakness the Transportation. this driven truck Commercial And we And expected. this to as in see From it's slide, let and the industrial and And demand down in by the were that very organically is in margin improve XX.X% for on executed perspective, decline sales markets weakness Europe in margins the North adjusted heavy will you were business, do America. in in America. teams We first can reflected operating Europe year. driven by and well, adjusted Sensors was our as trend the North XX% we that production an segment, later quarter. the broader So operating

chain move in our AI the $XXX on continue favorable trends broad these reflecting the Living, this to quarter. the to end-markets, organically, of growth thing Asia double XX% expect million grew Now leadership commercial western One segment design AD&M, our reflects fiscal demand reflect revenue And have these platforms across Slide weakness continue. this customer and see in business, and artificial ongoing we from recovery, multiple digits increased Automation begin organically, in it in In nice and momentum. are Solutions and In as Industrial supply grew an in in to aerospace, that automation and and base. In Networks Digital driven Data applications. were X% our XX% seen declined let geographies, Starting to We up defense area. sales organically, applications Transportation, with growth segment equipment in we expect automation stability across patterns especially with XXXX Connected these me intelligence and & by wins above by space factory be driven hyperscale appliance overview industrial the momentum former and businesses, strong strength seen in in we combines in the now X. increased order we've ongoing our applications and is Europe. we the markets, to markets that

leader well in reliability to infrastructure. I also a want portfolio a grid the North to being expands of power generation solutions applications product and TE existing power lightning our team. foundation of grounding the protecting is And medical as has by the a This of Our our solutions And investments utilities utility-scale employees along up medical momentum year. And customers are growth from the strength as in seeing business this highlight as sequential show expect do with that chain last is will this our want business by X% were ongoing resulted driven we hardening all we which American Harger, that industrial throughout as and needs highlight Sales reliability power, organically for business. that to Harger connectivity normalization we acquired in medical the we declined expected. and renewable supply welcome to inventory quarter, are that complementary made grid and as set. energy that regions broader acquisition increased within our XX% our that support I we're quarter market to the our move I to in renewables, and improved. and

the For on businesses Industrial were as Industrial the segment performance. operational adjusted expect to grow the points sequentially We second segment, earlier. and strong an XXX They driven XX.X%. basis expanded volume margins quarter, I highlighted year-over-year all by operating the in higher basis organic do in

to our over as more get that our performance, with me financials Heath, an going Now on it who hand the and will let expectations forward. overview of details into

Heath Mitts

Please to Thank morning, you, everyone. Terrence, Slide turn and X. good

primarily this was million an the $XXX as execution the levers, rate EPS million as $X restructuring charges. and to and restructuring record operating XX $X.XX. expect for reflects from the tax continued included said in effective tax included be were was deliver to with including $XX XX XX% the the efforts. is year ago. Adjusted we minimum expect below we and and rate savings to other For and we well. X million, teams QX, million, level our $X.XX expect rate year reflecting by segments, acquisition be quarter, XX% to tax days restructuring, charges the to operational of expect million ETR. fiscal expansion was to GAAP on of $XX GAAP Terrence as quarter, tax. in million tax same full initiatives. both our of operating days ETR Pillar QX $XXX as XX% continue a $XXX charges This of related with 'XX do at the strong and income footprint Again, restructuring adjusted a acquisition-related reminder, $X.XX as We specifically QX global as be I ago, the was But margin was performance charge to and past XX.X%. the of a guided of and adjusted restructuring well be EPS cash our to charges and importantly, around $X.XX, level, XX% range. in adjusted operating always, charges impact increased And year-over-year versus was prior we income optimization mentioned, and that other in adjusted

rate. margin to Now share flow $X.XX and now currencies, billion increased up expansion Adjusted were next year-over-year along impacted roughly to in included million guide. by of the year-over-year. 'XX, against first $XX that expansion from strong delivered Slide impact X operating year-over-year XX.X% effectively expect exchange if first higher of were that margins $X.XX EPS with currency fiscal the we the Sales exchange to $XXX quarter by in Due strengthening tax and Adjusted headwinds million exceed free quarters. cash us points million U.S. year-over-year. XX unfavorably in for earnings turn with of per impacted currency basis the you adjusted of roughly quarter, were headwinds we X, the $XXX driven versus expanding headwinds margin flat each of sales record of quarter $X.XX, were other by with X% the our dollar

Turning from we to Cash earlier. including shareholders buybacks million cash and million through dividends, mentioned bolt-on operations $XXX free segment, the we acquisition million utilized flow. million. for cash In quarter, $XXX acquisitions was in share the flow roughly that to and deployed $XXX $XXX and Terrence Harger the Industrial was

sheet capital. more optionality the Our balance use cash and of us gives generation healthy with

at as We looking to we shareholders. acquisition to will quarter, of strong mentioned attractive capital also valuations. pursue continue last more have bolt-on return But opportunities to are I've

that over to XXXX. let in strong me to we our deliver Now results expect to build upon questions, reinforce performance turn it past before financial I

we we control strong from drive strong generation to well benefit while we are markets, cannot serve dynamics to and deliver secular growth While the margins markets continuing year. performance cash our operational in of positioned to this the the trends expand

let's that, Sujal? with it -- this for with up questions, So open

Sujal Shah

the instructions Okay. session? Christa, can for give the Q&A you please

Operator

comes [Operator Instructions] Your first question line of Mark the from Delaney.

Mark Delaney

order a perhaps orders as transition to orders I and how $XXX starting was if here either now you patterns, linearity any guidance? over around you informing And industry the talking million, and is look the just positively orders outlook or hoping full this speak AI saw year just you're trends. as by could that's is quarter, by shorter understand to the better the end-market end-market, more recognizing that's And bit that have order on of XQ you at for your while volatility and in strengthened. term, seen But negatively the you to Blackwell? last

Terrence Curtin

call, Sure. Thanks, when FX stronger, Mark, were And expected. where coming in for had the question. but is the we And think more like as them sequential I industrial that. and ahead feel said about business broad good and see to impact, certainly, about it on we're orders the we we of is you talk to about sequentially. the ongoing going about why the talk momentum Certainly AI, in broadly build I'll -- improvement we

So I regionally to what also seeing. we're want highlight

And to at been the industrial growth when of strength see the even Weakness to you Europe has be when we reflect you where continuing especially in see broadly, we accelerating. saw, orders you think that and and space Asia. space Asia auto in the play. continues broad are heavy-truck We in orders look

And see of bit and with unevenness, so more little United you a that sort the States Americas being neutral.

be saw pretty though seen talked low Certainly, Asia. We -- market to at the acceleration see maybe auto it's in in will positive and to And end sort production Transportation, truck that even we're And the our in sequentially we the seen air AI to you to orders, growth continue you see the continue But as and even you around see that benefit And see strong markets, But control business continues sign, our business that smaller, are it's and year. M&A. Defense momentum But -- stability do to in that the about where still we into year. to later every investing that where that be orders X% nicely the orders production. And auto CapEx from. In a the have just was and We've been that. good without in the really, about your grew In we are expect AI broad. The year-over-year But of you utilities, there. momentum orders are strong. that AI, going area in industrial segment, the in. space. down to quarter. while continue people sort utility market, had Europe sound I weak. the positive, for a the increased a the book-to-bill out to the aerospace. sideways. space and the in we X. the it's see that an grow Industrial the question recovering. To It's area We what's be the expect in is hope the finally applications have in orders later we says aerospace, talked doesn't about applications segment, if continued fastest-growing an and above applications moving what have control area can was are we take tracking the seeing orders order And the we've commercial over still was XX% important weakness area is in growth in X% segments see area growth did in do automation automation improve in of area double-digit some they of the AI and it's X% energy, the we that stabilization year. some heavy that that improvement we of we

you the and question, So color I for, asked thanks that for Mark. think that gives the

Operator

the with comes question Scott Melius Research. from of line next Davis Your

Scott Davis

to your mentioned actually priorities. Industrial because on you focus relatively thing operating leverage TS that because really your guys little volume you whatever, move until managing when have it just not think that see leverage see margins do think bit in -- TS Do And job have is be of do proportional kind a how when, guys to or more recovery? we in is incremental I incremental to like you you or there? of But recovery you back But leverage? you a low-growth would a do need to XXXX we margins environment. I a costs recovery get clear. expect and about again, was think nice that second about incrementals but seems But whenever wanted let's outsized to improving margins may X come done how

Heath Mitts

Scott, this made appreciate we've I TS the margins. in certainly Listen, that, is Heath. a strides -- question. I'll lot of take it's and the

think you outsized, If our is our you as comfortable and -- common, of were we're are so don't go well. a QX as and at you forth. the which that about that humming back strong We level. years, very because saw about probably was year a talking always last seasonality -- always pretty XX% China in we is we're at few target margin quarter that factories Certainly, first

we're confident way our as we're by our that we number year. quarter but going -- as -- So or through to the we better be at XX% work

feeling that. about So automotive of we're good element

we segment. move business, The ourselves the builds mining Transportation obviously and year of element aware, side, part for component you're and The ag the of growth being profitable with in heavy other as year, construction, cycle. Commercial components a also which, equipment is as Transportation through the TS, the depressed has rough portfolio, truck our of and of nicely been of position are next the this

nicely. way be into leverage going the As the lot where to get of that's as our working work through. But some that we're leverage head we're lever's that that. way would returns from. a on And because We're we're that we holding of where to very more going growth, up our elements see 'XX to our

activities From has last some a a of automotive and cost in heavy of the perspective, our over Transportation few footprint segment, been years. particularly focus Europe,

fixed being And dependent where past some if we've are growth negative benefit particularly of and cost we're probably back that in the structure, Europe you over so sometimes XX or to low able environments too of Western tolerate the we X reduced or years. getting go because

not So that's but never in are is X% you over, see our -- certainly, journey down results solid. growth Transportation that in quite been and a year-over-year, the where yet is margins aggregate concerted now automotive quite effort, the it

that Scott. feel your we that. Hopefully, answers about So good question,

Operator

Daryanani question from next line comes the Evercore Amit with of ISI. Your

Amit Daryanani

year I upside seeing this Just So helpful. that Terrence, the you? from helping you is that's of Is some Are broader should related about quarter. Industrial revenues the AI given you're Heath, companies? the driving it versus seeing be more provide that ramps, exceeding what if this, hyperscalers the then, talk about you segment you we target you here? just would demand is how $XXX strength $XXX margin average? gains AI can million of on the And broad-based? folks actually had better just about share the profile talked wondering anything was target million maybe more AI last could or that to on clarity silicon levers And the for as think

Terrence Curtin

Yes, I appreciate question. sure. Thanks, the Amit,

there think it's we semiconductor the going quarter million told to million. First off we're revenue broad about one with what the when in we told that did our broad already where you about be a of it consistent at pretty that play quarter you it, And we just hyperscalers, positioned hyperscalers. you and it you. group it the and in players in is other are is the nice, how isn't last it $XXX what end. ourselves, When above We is doubled and look with year, we've the $XXX in being AI program, ecosystem is

on to continues. the that nice, we've talking we The in. momentum you, what X.X years talked started as about Now this ago, orders layering is keep about

about on and like. we the ramp. are the Our what the of the ramping many driven across really will which I how talked programs customer upside number these very we to we key is have base focus, ramps, execute is a ways we think by teams be The that on focused really in

not thing that's our stays big when sort The other of talk XX% we're it And in the also programs the It of XX%, how level has you that about is winning, sort share the but companies that this technology. our at going range. to share, is connector have opportunity shows changed. of that And requirements bringing share technology think about major because you industry that of the complex are has connectivity benefit to have. the from the we the the

similar margin, products the cloud we talked about that our margin few On a it's to years ago.

continue well drive as it. We are continue year. move in that it we just early but continue we ramp, you're the to the but this as as to can it's to up, benefit forward, feel so you year are not scale And IS -- going and into margin, volume move momentum these it and see in to we to ramps, going see next margin,

Operator

Your of next the Wamsi question Bank from line comes Mohan of with America.

Wamsi Mohan

that about I use the of levers get talk you a Terrence, do tariffs bit implemented. was you can if if little wondering, some could

very your have to strategy of larger I remarks. well? think you Would thoughts around, noted cash but your has advantages be We're And you market curious more at least is your bolt-on, of broadly M&A. and for to entering some as been prepared secondarily, flow the perceived deals around is kind heard to manufacturing what your strong. that's in get doing how favorable you a TE say open I be localization

Terrence Curtin

Sure.

then it. it, take piece of the cash let and part Heath take me the I'll flow Let of first

been first for just we've But about start Heath done localization about I we've our the on of baseline within little a about talked lot things have First in is some talked a from a everybody our bit Transportation. the footprint. know even of we historically thing we've repositioned. footprint with how let's region. off, focused And

our where the one is in the center you you make to. and not ship So manufacturing region that's business of one world,

we how our very of And XX% right chains, supporting hard region. make in-region. say very supply we our in is much it's what sure and worked we've is do to aligned footprint Our to customers manufacture to customers'

customer's focused matter to very them we we is playing and they on what work, can it is or talk as to customers. what from would we And But adapt, nuanced, that position. so out So good no a supply our tariff adapt. feel do comes leverage how, continue have very from we each chain we perspective, offensive a of at us we're

all with. customers also in playbook what their our it our in So a preparing overview, with about that It impacted that through the about price. million from be. with went on we on, customers had or what is cost choice, find think -- as be depending back perspective, about customers, in we tooling know don't that should we that it I with $XXX XXXX tariff via to that been we passing the costs hit of of think XXXX. an we've a we've the whether areas And we is couldn't solutions to and get whether moving our already where lanes, was dealt thinking as manufacturing you And we're with what key tariffs we're tariff little prepared logistical bit it be along that worked and we that to do, do could

it the last And prepared we options and So the to customers. recovered leveraging our through footprint. to. and time important same staying think we're We the cost time, close those is thing we'll all this do

and with on why front, maybe cash flow topic? you M&A don't cover the Heath, So the tariff that,

Heath Mitts

optionality. Yes. flow, our It's of lot us a of company. we've record Wamsi, given as up years cash of obviously, a a free flow cash couple stacked

a our dividends We platform But know just share for active looking in new continued repurchases. We areas that the we amount owners home that referring, to really close reminder, through are for fair that close things have M&A. use be space referring we're to us. we've and returned bolt-on, a to a as may the to that versus be or well, term a

confuse bolt-ons size. want don't with to So I

to bolt-ons Sometimes companies, as right can we're midsized a in sometimes much are small larger. And those active opportunities come very now.

We have increase. seen pipeline the

the and it acquire have we areas particular in fragmentation around resources very and environment. market our a of active coming it's seen X than opportunities in see say, discussions just things. seen more -- to months resourced We we've let's over go I'd where terms while. for enhanced to or, active that and it's And us we deals prior for had say an past we've

So we there's active expect should good be there, here. us forward and you I move think out to as some opportunities

Operator

comes of Your Steven Fox question from with line Fox the next Advisors.

Steven Fox

wondering about cloud could industrial business, away from automation I maybe you and little just more controls. Terrence, but talk a the if not bit markets, traditional was the

some trends XX these days different You've much any mentioned Is go ago? a that in can from year we've seen what How region? improve particular the as you of through sideways are that you stabilization. encouraged

Terrence Curtin

us, been thanks, behind a and our And would question. discussions with would we still I the this we it tell is I for inventory you, mode as trying for arms spots front market say, that. sit together, hoping the Steve, would here, bit all stabilization, like seeing like orders No, good we -- distribution look also not more our also and were get seeing. orders. we're in of last in would a strong as tell time in have we customers. in through to I When the but in partners, around I our little as of that goes we're probably lot the look say than stabilization elements us we would are Yes. through stabilization, our more truly many of you, we've we does the were

China, order those in them that tell you the you, seeing inflection past couple customers our the Japan seeing? are points you, of we when serve in what quarters, tell upward would we're larger were momentum. automation where is, thing I I are other at directly, look that the you And upward for would and

a it's positive sideways, versus I And are we U.S. positive a in more probably have is weakness. the that but So customers say would our are European Asia. to that's customers here where show been. continuing

overall, it's So stable.

and which is mainly is we going we have play, I when are think face company discrete. and we do not about geographic a drivers seeing do ahead, it's are think in what stabilization people investing when been that about is think economies about it. things you certainly, about productivity, are that's And levels. But are first we different a when the And reshoring, to think if CapEx we're been positive companies think let's step. areas around these other investment needed it, investing the tariffs all what and to we've surprising that needed you mix, think in where

I than part. net-net, it more tilt the positive like in upward means. not it's book it's globally with I So sideways It's by certainly, But any unevenness talked every region more the was. early think full order on a in

we can this color. I off an area So think Steve, hope as I through that year. adds that that's But of move we build

Operator

Your line next Langan the Fargo. question comes Colin Wells with of from

Konstandinos Tasoulis

market, in double double This over Can end for is just growth Kosta range. on you just down filling Colin. America, China? of I North LVT assumption, click and X.X% Tasoulis wanted low on X% your X% to X% click negative to to Europe the

Terrence Curtin

was the production point Sure. Thank down as being on the said down saw call, a quarter, we And year down first first expect auto saw X% be quarter. very production down we saw or bit It for And the in North production. growth we do auto we in America little was Europe X. you question. in XX% to X the We being, in production. auto Asia. this And strong first off

to X% comes see of we're remind vehicle X% going have. you low When think I the Europe, we the have everybody to we production. that end per Europe the at unevenness is we do be So to range. our content about in the range, want when said it highest to

still of growth position. believe the about of where And of X% in lots planet, one range. vehicles the discussion can the in driven we there's on be million electric So really a we very questions. X% out little around is, that But the over thing other to have be at vehicles Asia. going electrified I where there's and to know end to going the The market X we XX% is Asia, of those are west more made, be strong

increase content the that will as OEMs do So from Asia western transitions. their in we still benefit

us includes gets that all how thing win of a level all introduction and safety of also zonal certainly would need designs compute the XX-volt the China And say, sort autonomy at that. with recently what for gives large other features, certainly, software-defined about, happens design electronification, And around put architectures just we into that and OEM connectivity. of we're had an The always creates range. in which I That that shows occur, talked acceleration vehicle, I the increase. confidence on features, that that a mentioned seeing that be to end low content we've that the of

to North growth in do be expect vehicle Asia be production environment EV trends electrified great year, weak the driven down. will and out So position. expect in We environment to a weak slightly do America, of production have be this the Europe. we the where Europe. we The of

Operator

Securities. of comes next Your Stein the question William Truist line with from

William Stein

dig in think heard opportunity maybe connector technology cross-licensing that's little this new I'd I bit by to a level about maybe -- like quite one bit down. the a bit you at little We've in don't area. industry. to a

or So context. there's when revenue and And the that effect in maybe you cross-licensing on margins that of in us put can it confirm maybe space. understand help IP also on going

Terrence Curtin

to things. sure, licensing, new. cross right, an datacom A do have of the you're is these ramps, sure have in help we with time you of couple security ramps. it's seen and this And Yes, ask telecom you we customers And have "Hey, space, area the not to over supply." Will. with our that, When for. sure have it and so as I I make really want cross-license have time over customers we competitors make

solution. make you the face to really it, there, technology a of also, but you cross-license other's each help it's sit sharing the to have Obviously, So we it let's a customer sure have get when share. is to we collaborative,

other, it's traditional something exciting can actually the volumes have meet so datacom we something space and let's space that it that's each in very make cross-license the to really growth trend. the interconnect And of we the about we are it, that I time. been ramps view an as as coming. face that's sure And have And to partners for a long

Operator

comes question with the Asiya Merchant of next from Your Citigroup. line

Asiya Merchant

you the the I a think you've recently co-packaged some questions opportunity? perhaps are players in that's guys think 'XX. do semiconductor you how AI given But got this seems Clearly, about some We you longer to billion do and be what or as How fiscal in. years. accelerating think it just TE outlined participating that about term, opportunity $X accelerating for guys of space? optics how few co-packaged plays about are here forecasting in that

Terrence Curtin

face while That not when to do First optics. optics, even that, connectivity be capability we do it, let's we what the do on look But get architectures, in further what And happens in will it you have and are have play experience close chip, to going will co-packaged that the going approach. bring. into that is And at you customers happens off you strength. be you away, over time, don't being, need to copper. we is a play that you're our a still when hybrid

as that, evolved. means that when have you're about guide, you what engineers we've And to the And we where evolution to So it architecture think which things that's gone just best work. solve, with have out you get like means the when architecture. harder you gets get we have their that problems excited the do typically includes going of will into

Operator

with Your line Baird. next from the question of Junk Luke comes

Luke Junk

you data architectures. out comment of the could opportunity about your TEL specifically in just course, around for of a coming the expand on bit hoping Terrence, SDP little car, more in --

just in be China, trend incremental some maybe is of maybe it content, possible that around be a could of Asia to CPV where but out ahead pipeline mentioned to broadly, more You zoom driver. guardrails as lot would but terms well put underappreciated attention this on electrification terms as an And maybe the the in West? especially of that award you major in if could

Terrence Curtin

the just excited and as we things. clearly important. everybody the electrified of plays a but sort an content, we've big content, always we've think said, other we've Asian that about always of And No, talked it's customers continue the said, that as chunk is momentum. software-defined, that of about. When always as moves, And about area leading Luke bucket our no, electronification couple this that there's you are you to here, -- been powertrain to see when a way that's

do allows to all You're you really connectivity, occur. forth how need the that looking eliminated, software-defined data you buttons architecture configuration in software Ethernet mechanical and have allows so that to here car move that get that as get really definitions, a

get think as that excited impact we'll one how X%. occur. share that wins what's been all to that's And on And $XXX $X about X we And wins go to expect it, let's billion vehicle. already set sure of content modules that And per X% a continue when there of a even going it's the continue It's to gotten this to to nice does And that about from our our And to it's year, which what are get accelerate. about. even thoughts us here And million to include grow. into can that the you of supports continued And another face you to is accelerating. connections up needs lever this wins feel only content doesn't those comes customer, that those recently things win. acceleration to the we've be about adding product make we has life. continues that to

Operator

the comes question line Joe Giordano from Cowen. next TD Your with of

Joseph Giordano

touched I major a subjects. lot think on we've the

kind mentioned than on different here. kind last if orders then much ramp quarter decline pretty seeing and the couple maybe just Or you've know substantial that So the of we that just been level that a orders on consistent here? of I suggest there need I Are seems ask you that with similarly Medical, to in at could end-demand? a evidence quickly we've stabilization. kind of And any Equipment, from Industrial seeing of are like

How of and of kind So that is that something that kind of onetime you a rate? a correction do that back you're seeing there? the beginning of we're is normal kind view Or to market?

Terrence Curtin

a of strengthening sequential that I bit we'll stabilization. on but Sure, a say, accelerates, did get would it we talked medical And we're We see hopefully, it them see forward, little that would move I would across very that's seeing like that like first now. event. think different stabilization see had questions. think improvement earlier. is Industrial Joe. off right now, modeling other from Yes, perspective did some call we that Equipment, to you're and of a I we over-inventoried. down. have inflection broader, the think But I as improvement, this. a point On expect on the more, Joe, take I we device, Medical, onetime to regions customers going then sequential Two what right view then We And say quarter.

we've really there. will as was we seen above the sequentially stays it here already chain build year. X, well shouldn't back orders in up through the move pocket that it You assume And a supply but improve, book-to-bill

Joe. thanks the question, for So

Operator

with question next line from comes the of Jefferies. Saree Boroditsky Your

Saree Boroditsky

margin just maybe building So on that some of commentary the made. you've

of You spoke year. or bit about restructuring this to footprint for benefit some margins the a Maybe consolidation related the charges that about let's talk for XXXX little maybe of restructuring XXXX.

Heath Mitts

it legacy is that to will several this continue. years now. Sure, moving continuation footprint And journey Well, our that a more for western going on is I'll or that. has And Heath. of continued, regions. lot expensive take been of lower-cost has areas production the

negative certainly, can segment, modest to in -- to margins. ability we our Transportation leverage as yet expand growth it currently see You in our

moved Morocco. away is certainly, So comment. from global a our into focused a been in most little we've and of there Europe Western has and But more as in Eastern restructuring that Europe Europe bit

segment X that little fragmented bit is within different business Industrial more obviously the though, report the on with For segment segment units we Industrial a that here.

more year. of equipment things industrial across it's recoveries energy like modest the defense, is that and our by DDN old appliances. see AI which ECL and other to business. there activity business, within But some in our like areas more growth then the aerospace and this will Terrence's And and obviously broad-based also We is driven point,

way some the to help done ahead meantime, automation factory we improvement are not of nice that. So feel getting this year. And there, segment. need that business, a top to the we But good on from in Certainly we the we through entitlement in we know line some cost help that we're from just about pull the support level. mitigate will industrial perspective expecting which within segment there to journey. margin-wise we've but and significant of We margin work is pretty are equipment, there, side margin our start that where be at side as some that below as otherwise an things

else I think company. you back the year, the when you in than of end the we're and back more will at sit anywhere you'll see margin sitting expansion there

Operator

next Chatterjee comes from line the question Your of Samik JPMorgan. with

Samik Chatterjee

you margins better. data expect Just understand sort sort to commercial prepared just would Can indications remarks, just inform what What that there. of year multiple in to view? of mean seeing your drive in highlight you are is driving that points times confidence? I here. I to quick you and help one to getting you that that the you're be during know to Transportation mentioned vehicle improve the that

Heath Mitts

a it time. and Samik, business, heavy margin Yes, think for we've long does public has truck well positioned is cycle. the with, with a there. globally cycles It We're production. pretty been It quite been I business nice and ICT

parts through their feel So they impact do different directions. both sometimes we of the regions as go of cycle, certain

unit, that and -- dilutive see able our to a leads part see this there hold expect line coming support that in it we given how Transportation there up business I'm And the top really segment. starting was we customers certainly that even of fits for year, some to, there's segment end business there's -- fiscal impact segment is start things referring to comment so outsized from margins sorry, to the towards unit, in. okay. But where margin my the just line where earlier hopefully, into would of with been We've it in we though the our growth to but relative XXXX, as that Commercial

and truck. heavy that in emissions calling a change we're the But for and particularly not some not where is We're ball little standards bit we're with the there things recovery the of So of certainly, seeing, terms are a spiking or the of now. for view of a discussions some X. in longer quarter next

Terrence Curtin

that's as would Yes, typically there year in point. that's expect is we of elements, will to 'XX, one when there look demand you'll that will that the cycle, out And further that. be from some an emissions Heath's change in probably and forward -- the we it, pull into benefit 'XX, before and there see of

Operator

Your with Spak next question UBS. of the Joe comes from line

Joseph Spak

margin for me. Two quick questions

an of typically how so, First, customers. that by Digital get that generation in margin we and auto, reporting know at from December segment Data segment, old helped recoveries I business. the tend if was quarter, margins. surmise all we much? Networks could companies above-average the some the then And the is engineering wondering If to from occurred

how see growth, AI wondering sort on and I'm investing we the little of business margin could as depending invest. a when pace whether on? investment ahead, strong You that to you talked need about actually comes you're of just growth, to the variability from continue of bit see

Terrence Curtin

A things. couple of

these been have investing We ramps. for

let's take second So Joe. the of part your question,

on I'm to cycle. first going bit. On to up you've part, seen you the cloud reask the ask where was in it DDN, it, little you broke a But

it be lumpy we're programs to orders We capacity really of doing at have does in doubling that. And will sure already. and -- execution that times. ramps been will have, the ahead, you'll investment have been adding make investing and handle businesses, to our And create see there lot we a ahead we in

around that our question impact segment. that you this Can see talk will one in about Transportation you the I So December. on missed again? margin

Joseph Spak

Yes.

December just auto, margins that their get all And wondering had helped the I the quarter...? companies In the quarter or customers. at see in sometimes Sorry. recoveries typically, was in whether engineering occurred we from some

Terrence Curtin

margin, you is of that. Asia. well it earlier, the at We Heath When have year, do said period production it not out of the look No. mainly first highest quarter the

crank volume do really that hotter than It reimbursement, back due engineering times little our if time really we benefit of with and and Asia. Our nothing you And margin many look the in a is has at first it's get years, quarter plants bit Joe. from year, it. the to other

Operator

Your line with of Glynn next question comes from Christopher the Oppenheimer.

Sujal Shah

Okay.

having I think trouble we're with some line. Chris'

joining no morning. contact thank And us will if for want you Relations have TE. Investor we there's with everyone, please this day. Thanks, further later. circle you I everybody more to a nice questions, at have do back But questions, Chris, So if and

Operator

now today's concludes participation, may Thank This you conference disconnect. you call. and for your

TE Connectivity (TEL) 22 Jan 252025 Q1 Earnings call transcript