TE Connectivity Q4 Sales Rise 12% as Orders and Backlog Reach Records

TE Connectivity (NYSE: TEL) reported double-digit fiscal fourth-quarter growth and record full-year sales, adjusted earnings and free cash flow, as demand across its Industrial Solutions portfolio helped lift margins and orders. The company expects its strong order book and record backlog to support fiscal 2027 organic sales growth consistent with the 12% achieved in fiscal 2026.

For the quarter ended Sept. 25, 2026, net sales rose 12% year over year to $5.31 billion, while organic sales increased 13%. Orders climbed 29% to $6.06 billion and rose 6% sequentially, producing a book-to-bill ratio of 1.14.

GAAP operating income increased to $1.09 billion from $916 million, with operating margin expanding to 20.6% from 19.3%. Adjusted operating income reached $1.18 billion, and adjusted operating margin widened by 100 basis points to 22.1%.

Diluted earnings per share from continuing operations were $3.10, compared with $2.23 a year earlier. Adjusted EPS increased 21% to $3.14. TE attributed $0.54 of the year-over-year adjusted EPS increase to operational performance, while tax rates contributed $0.01.

Fourth-quarter free cash flow was $1.24 billion, up from $1.15 billion, and the company returned approximately $800 million to shareholders. The quarter included $87 million of IEEPA tariff refunds expected to be returned to customers, reducing reported sales by that amount and adjusted EPS by $0.01.

Industrial Solutions leads growth

Industrial Solutions sales increased 20% on both a reported and organic basis to $2.80 billion. Adjusted operating margin rose 40 basis points to 22.4%, even as the company increased growth investments.

Digital Data Networks was the largest contributor, with sales rising 34% to $949 million as momentum in artificial-intelligence applications continued. Full-year orders for the business increased about 70%.

Automation & Connected Living sales grew 18% to $688 million, reflecting growth across all regions driven by automation applications. Energy sales advanced 12% to $520 million as grid-hardening activity and data-center construction supported demand. Aerospace, Defense and Marine sales rose 15% on a reported basis and 16% organically to $462 million, while Medical sales increased 1% to $180 million.

Industrial Solutions orders reached $3.32 billion, up 47% year over year and 13% sequentially, with double-digit order growth across all of the segment’s businesses.

Transportation Solutions sales increased 8% to $2.60 billion, or 7% organically. Adjusted operating margin expanded 80 basis points to 21.0%.

Automotive sales rose 7% on a reported basis and 6% organically to $1.93 billion, which the company attributed to content outperformance in Asia and Europe. Commercial Transportation sales increased 18% to $428 million, supported by content growth across regions and improving end markets. Sensors sales declined 2% to $239 million, in line with the company’s expectations.

Transportation orders totaled $2.73 billion, up 13% from a year earlier but down 1% sequentially. TE said orders reflected continued content outperformance in Automotive and Commercial Transportation, along with improving commercial transportation markets.

Fiscal 2026 records and cash deployment

For fiscal 2026, TE generated record sales of $19.89 billion, up 15% on a reported basis and 12% organically. Adjusted operating margin increased 120 basis points to a record 22.0%, while adjusted EPS rose 24% to a record $11.52.

Full-year orders increased 27% to a record $22.2 billion. Industrial Solutions sales rose 26% to $9.90 billion, including 21% organic growth, while Transportation Solutions sales increased 7% to $10.07 billion, including 5% organic growth.

Free cash flow reached a record $3.41 billion, representing 100.7% conversion of adjusted income from continuing operations. Cash from operating activities was $4.53 billion, while net capital expenditures totaled $1.11 billion.

TE returned about $2.8 billion to shareholders during the year, comprising $1.89 billion of share repurchases and $869 million of dividends. The company also said it committed approximately $1.6 billion to bolt-on acquisitions. Year-end cash stood at $1.70 billion, compared with total debt of $5.64 billion.

First-quarter outlook

For the first quarter of fiscal 2027, TE expects sales of approximately $5.35 billion, representing growth of about 15% on both a reported and organic basis. Adjusted EPS is projected at approximately $3.30, up 21% year over year, while GAAP diluted EPS from continuing operations is expected to be about $3.04.

The outlook includes approximately $50 million of IEEPA tariff refunds expected to be returned to customers, with no anticipated EPS effect. Management expects fiscal 2027 organic sales growth to be consistent with fiscal 2026, supported by strong orders and backlog.

TE cautioned that its outlook remains subject to demand conditions in automotive and other end markets, competition and pricing pressure, foreign-exchange and commodity-price fluctuations, geopolitical instability, supply or operating disruptions, credit-market developments, tax-law changes and evolving environmental and other regulations. The company also noted that its non-GAAP measures exclude certain items and may not be comparable with similarly titled measures used by other companies.