What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-01-23 compared with 2025-07-25 · 95 added, 178 removed, 228 unchanged (54% of the section changed)

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TE Connectivity plc (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”) is a global industrial technology leader creating a safer, sustainable, productive, and connected future.

Our broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, energy networks, automated factories, data centers, medical technology, and more.

Change in Place of Incorporation

At the beginning of fiscal 2025, our jurisdiction of incorporation changed from Switzerland to Ireland.

We do not anticipate any material changes in our operations or financial results as a result of the change in place of incorporation.

See additional information in Note 1 to the Condensed Consolidated Financial Statements.

New Segment Structure

Effective for fiscal 2025, we reorganized our management and segments to align the organization around our current strategy.

We now operate through two reportable segments:

Transportation Solutions and Industrial Solutions.

Prior period segment results have been recast to conform to the new segment structure.

See additional information in Note 1 to the Condensed Consolidated Financial Statements.

As a trusted innovation partner, our broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, energy networks, automated factories, data centers enabling artificial intelligence, and more.

Summary of Performance

● Our net sales increased 13.9% in the third quarter of fiscal 2025 due to sales growth in the Industrial Solutions segment and, to a lesser degree, the Transportation Solutions segment.

In the first nine months of fiscal 2025, our net sales increased 6.2% due to sales growth in the Industrial Solutions segment, partially offset by sales declines in the Transportation Solutions segment.

● Our net sales increased 21.7% in the first quarter of fiscal 2026 due to sales growth in the Industrial Solutions and Transportation Solutions segments.

Richards Manufacturing Co.

(“Richards Manufacturing”), which was acquired in April 2025, contributed net sales of $73 million.

On an organic basis, our net sales increased 9.1% and 4.8% in the third quarter and first nine months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

(“Richards Manufacturing”), which was acquired in the third quarter of fiscal 2025, contributed net sales of $107 million.

On an organic basis, our net sales increased 15.0% in the first quarter of fiscal 2026 as compared to the same period of fiscal 2025.

● Our net sales by segment were as follows:

● Transportation Solutions —Our net sales increased 2.8% in the third quarter of fiscal 2025 due primarily to sales increases in the automotive end market and, to a lesser degree, the commercial transportation end market.

In the first nine months of fiscal 2025, our net sales declined 2.5% as a result of sales declines in all end markets.

● Industrial Solutions —Our net sales increased 30.0% and 19.7% in the third quarter and first nine months of fiscal 2025, respectively, as a result of sales growth in the digital data networks;

aerospace, defense, and marine;

and automation and connected living end markets, partially offset by sales declines in the medical end market.

● In June 2025, our board of directors declared a regular quarterly dividend of $0.71 per ordinary share, payable on September 12, 2025, to shareholders of record on August 22, 2025.

● Net cash provided by operating activities was $2,718 million in the first nine months of fiscal 2025.

● We acquired Richards Manufacturing, a U.S.-based producer of overhead and underground electrical and gas distribution products, in the third quarter of fiscal 2025.

In the fourth quarter of fiscal 2025, we expect our net sales to be approximately $4.55 billion, as compared to $4.07 billion in the fourth quarter of fiscal 2024.

This increase is due primarily to sales growth in the Industrial Solutions segment, which will benefit from the recently completed acquisition of Richards Manufacturing.

In the fourth quarter of fiscal 2025, we expect diluted earnings per share from continuing operations to be approximately $2.18 per share.

This outlook reflects the positive impact of foreign currency exchange rates on net sales and earnings per share of approximately $111 million and $0.03 per share, respectively, in the fourth quarter of fiscal 2025 as compared to the same period of fiscal 2024 and includes the impact of currently enacted tariffs which we expect to largely mitigate through pricing actions and sourcing changes.

● Transportation Solutions —Our net sales increased 10.0% in the first quarter of fiscal 2026 due primarily to sales increases in the automotive end market and, to a lesser degree, the commercial transportation end market.

● Industrial Solutions —Our net sales increased 38.2% in the first quarter of fiscal 2026 primarily as a result of sales growth in the digital data networks and energy end markets.

● In December 2025, our Board of Directors declared a regular quarterly cash dividend of $0.71 per ordinary share, payable on March 13, 2026, to shareholders of record on February 20, 2026.

● Net cash provided by operating activities was $865 million in the first quarter of fiscal 2026.

In the second quarter of fiscal 2026, we expect our net sales to be approximately $4.7 billion, as compared to $4.1 billion in the second quarter of fiscal 2025.

This increase is due to sales growth in both the Industrial Solutions segment, which will continue to benefit from the fiscal 2025 acquisition of Richards Manufacturing, and the Transportation Solutions segment.

In the second quarter of fiscal 2026, we expect diluted earnings per share from continuing operations to be approximately $2.26 per share.

This outlook reflects the positive impact of foreign currency exchange rates on net sales and earnings per share of approximately $180 million and $0.05 per share, respectively, in the second quarter of fiscal 2026 as compared to the same period of fiscal 2025 and includes the impact of currently enacted tariffs and our planned mitigation of those tariffs.

Also, this outlook is based on foreign currency exchange rates and commodity prices that are consistent with current levels.

As discussed above, on April 1, 2025, we acquired 100% of Richards Manufacturing for cash of approximately $2.3 billion, net of cash acquired.

The acquired business has been reported as part of the energy business within our Industrial Solutions segment from the date of acquisition.

During the first nine months of fiscal 2025, we acquired two additional businesses for a combined cash purchase price of $321 million, net of cash acquired.

The acquired businesses have been reported as part of our Industrial Solutions segment from the date of acquisition.

See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding acquisitions.

Results of Operations

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Quarters Ended

Nine Months Ended

($ in millions)

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The following table provides an analysis of the change in our net sales by segment:

Change in Net Sales for the Quarter Ended June 27, 2025

Change in Net Sales for the Nine Months Ended June 27, 2025

versus Net Sales for the Quarter Ended June 28, 2024

versus Net Sales for the Nine Months Ended June 28, 2024

Organic Net Sales

Change in Net Sales for the Quarter Ended December 26, 2025

versus Net Sales for the Quarter Ended December 27, 2024

Organic Net Sales

Growth (Decline)

(Divestiture)

($ in millions)

1 unchanged sentence

Industrial Solutions

Net sales increased $555 million, or 13.9%, in the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024 due to organic net sales growth of 9.1%, the positive impact of 3.1% from acquisitions, and the positive impact of foreign currency translation of 1.7% due to the strengthening of certain foreign currencies.

Richards Manufacturing, which was acquired on April 1, 2025, contributed net sales of $73 million in the third quarter of fiscal 2025.

Net pricing actions positively affected organic net sales by $28 million in the third quarter of fiscal 2025.

In the first nine months of fiscal 2025, net sales increased $736 million, or 6.2%, as compared to the first nine months of fiscal 2024 due primarily to organic net sales growth of 4.8% and the net positive impact of 1.7% from acquisitions and a divestiture.

Richards Manufacturing contributed net sales of $73 million in the first nine months of fiscal 2025.

Net pricing actions positively affected organic net sales by $8 million in the first nine months of fiscal 2025.

Net sales increased $833 million, or 21.7%, in the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025 due to organic net sales growth of 15.0%, the positive impact of 4.0% from acquisitions, and the positive impact of foreign currency translation of 2.7% due to the strengthening of certain foreign currencies.

Richards Manufacturing, which was acquired in the third quarter of fiscal 2025, contributed net sales of $107 million in the first quarter of fiscal 2026.

See further discussion of net sales below under “Segment Results.”

Net Sales by Geographic Region.

Our business operates in three geographic regions—Europe/Middle East/Africa (“EMEA”), Asia–Pacific, and the Americas—and our results of operations are influenced by changes in foreign currency exchange rates.

Our business operates in three geographic regions—Asia–Pacific, Europe/Middle East/Africa (“EMEA”), and the Americas—and our results of operations are influenced by changes in foreign currency exchange rates.

Increases or decreases in the value of the U.S.

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Approximately 60% of our net sales were invoiced in currencies other than the U.S.

dollar in the first nine months of fiscal 2025.

dollar in the first quarter of fiscal 2026.

The following table presents our net sales and the percentage of total net sales by geographic region (1) :

Quarters Ended

Nine Months Ended

($ in millions)

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The following table provides an analysis of the change in our net sales by geographic region:

Change in Net Sales for the Quarter Ended June 27, 2025

Change in Net Sales for the Nine Months Ended June 27, 2025

versus Net Sales for the Quarter Ended June 28, 2024

versus Net Sales for the Nine Months Ended June 28, 2024

Organic Net Sales

Change in Net Sales for the Quarter Ended December 26, 2025

versus Net Sales for the Quarter Ended December 27, 2024

Organic Net Sales

Growth (Decline)

(Divestiture)

($ in millions)

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Quarters Ended

Nine Months Ended

($ in millions)

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As a percentage of net sales

Gross margin increased $214 million and $346 million in the third quarter and first nine months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024 due primarily to higher volume and improved manufacturing productivity.

Gross margin increased $379 million in the first quarter of fiscal 2026 as compared to the same period of fiscal 2025 due primarily to higher volume and improved manufacturing productivity.

We use a wide variety of raw materials in the manufacture of our products.

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Quarters Ended

Nine Months Ended

We expect to purchase approximately 185 million pounds of copper, 105,000 troy ounces of gold, 1.8 million troy ounces of silver, and 12,000 troy ounces of palladium in fiscal 2026.

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Quarters Ended

Nine Months Ended

($ in millions)

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As a percentage of net sales

Acquisition and integration costs

Restructuring and other charges, net

Selling, General, and Administrative Expenses.

Selling, general, and administrative expenses increased $60 million in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 due primarily to increased selling expenses to support higher sales levels, higher incentive compensation costs, and incremental expenses attributable to recently acquired businesses, partially offset by savings attributable to restructuring actions.

In the first nine months of fiscal 2025, selling, general, and administrative expenses increased $73 million as compared to the first nine months of fiscal 2024 due primarily to increased selling expenses to support higher sales levels, higher incentive compensation costs, and incremental expenses attributable to recently acquired businesses, partially offset by savings attributable to restructuring actions and the release of reserves associated with trade compliance matters.

Acquisition and Integration Costs.

During the first nine months of fiscal 2025, we incurred acquisition and integration costs of $41 million, of which $25 million related to the acquisition of Richards Manufacturing.

See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding this acquisition.

Selling, general, and administrative expenses increased $111 million in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 due primarily to increased selling expenses to support higher sales levels, higher incentive compensation costs, incremental expenses attributable to recently acquired businesses, and the impact of cost inflation.

Restructuring and Other Charges, Net.

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These initiatives are designed to help us maintain our competitiveness in the industry, improve our operating leverage, and position us for future growth.

During fiscal 2025, we initiated a restructuring program associated with footprint consolidation and cost structure improvements in both of our segments.

We incurred net restructuring charges of $97 million during the first nine months of fiscal 2025, of which $80 million related to the fiscal 2025 restructuring program.

Annualized cost savings related to the fiscal 2025 actions commenced during the first nine months of fiscal 2025 are expected to be approximately $70 million and are expected to be fully realized by the end of fiscal 2026.

During fiscal 2026, we initiated a restructuring program to optimize our manufacturing footprint and improve the cost structure of our organization.

We incurred net restructuring charges of $10 million during the first quarter of fiscal 2026, of which $4 million related to our fiscal 2026 program.

Annualized cost savings related to the fiscal 2026 actions commenced during the first quarter of fiscal 2026 are expected to be approximately $3 million and are expected to be fully realized by the end of fiscal 2027.

Cost savings will be reflected primarily in cost of sales and selling, general, and administrative expenses.

For fiscal 2026, we expect total restructuring charges to be approximately $100 million and total cash spend, which will be funded with cash from operations, to be approximately $110 million.

During both the first nine months of fiscal 2025 and 2024, we incurred costs of $11 million related to our change in place of incorporation from Switzerland to Ireland.

See Note 1 to the Condensed Consolidated Financial Statements for additional information regarding the change.

See Note 2 to the Condensed Consolidated Financial Statements for additional information regarding net restructuring and other charges.

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Quarters Ended

Nine Months Ended

($ in millions)

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Nine Months Ended

(in millions)

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Restructuring and other charges, net

Taxes (non-income tax) recorded in selling, general, and administrative expenses

Amortization expense

See discussion of operating income below under “Segment Results.”

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Quarters Ended

Nine Months Ended

($ in millions)

Income tax expense (benefit)

Interest expense

Income tax expense

Effective tax rate

Interest Expense.

Interest expense increased $24 million in the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025 due primarily to higher average debt levels and cost of debt.

Income Taxes.

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Quarters Ended

Nine Months Ended

($ in millions)

Commercial transportation

(1) Industry end market information is presented consistently with our internal management reporting and may be revised periodically as management deems necessary.

The following table provides an analysis of the change in the Transportation Solutions segment’s net sales by industry end market:

Change in Net Sales for the Quarter Ended June 27, 2025

Change in Net Sales for the Nine Months Ended June 27, 2025

versus Net Sales for the Quarter Ended June 28, 2024

versus Net Sales for the Nine Months Ended June 28, 2024

Organic Net Sales

Change in Net Sales for the Quarter Ended December 26, 2025

versus Net Sales for the Quarter Ended December 27, 2024

Organic Net Sales

Growth (Decline)

($ in millions)

Commercial transportation

Net sales in the Transportation Solutions segment increased $67 million, or 2.8%, in the third quarter of fiscal 2025 from the third quarter of fiscal 2024 due to the positive impact of foreign currency translation of 1.7% and organic net sales growth of 1.1%.

Our organic net sales by industry end market were as follows:

● Automotive— Our organic net sales increased 1.5% in the third quarter of fiscal 2025 as a result of growth of 10.5% in the Asia–Pacific region, partially offset by declines of 6.6% in the Americas region and 4.8% in the EMEA region.

Our organic net sales growth in the Asia–Pacific region was due to increased content per vehicle as well as vehicle production growth.

In the Americas and EMEA regions, our organic net sales were impacted by declines in vehicle production.

● Commercial transportation— Our organic net sales increased 2.7% in the third quarter of fiscal 2025 due to growth in the Asia–Pacific and EMEA regions, partially offset by declines in the Americas region.

● Sensors— Our organic net sales decreased 3.8% in the third quarter of fiscal 2025 as a result of market weakness in both industrial and transportation applications.

In the first nine months of fiscal 2025, net sales in the Transportation Solutions segment decreased $176 million, or 2.5%, from the first nine months of fiscal 2024 due primarily to organic net sales declines of 1.9%.

Net sales in the Transportation Solutions segment increased $224 million, or 10.0%, in the first quarter of fiscal 2026 from the first quarter of fiscal 2025 due to organic net sales growth of 7.0% and the positive impact of foreign currency translation of 3.0%.

Net price erosion negatively affected organic net sales by $22 million in the first quarter of fiscal 2026.

Our organic net sales by industry end market were as follows:

● Automotive —Our organic net sales were flat in the first nine months of fiscal 2025 as declines of 11.3% in the EMEA region and 7.6% in the Americas region were largely offset by growth of 11.7% in the Asia–Pacific region.

In the EMEA and Americas regions, our organic net sales were impacted by declines in vehicle production and a shift in platform mix consistent with consumer demand.

Our organic net sales growth in the Asia–Pacific region resulted from increased content per vehicle as well as vehicle production growth.

● Commercial transportation —Our organic net sales decreased 4.6% in the first nine months of fiscal 2025 as a result of declines in the Americas and EMEA regions, partially offset by growth in the Asia–Pacific region.

● Sensors —Our organic net sales decreased 8.7% in the first nine months of fiscal 2025 due to market weakness in both transportation and industrial applications.

● Automotive— Our organic net sales increased 6.5% in the first quarter of fiscal 2026 as a result of growth of 9.9% in the Asia–Pacific region and 3.9% in the EMEA region, partially offset by declines of 0.5% in the Americas region .

Our organic net sales growth in the Asia–Pacific and EMEA regions was due primarily to increased content per vehicle.

In the Americas region, our organic net sales declined due to declines in vehicle production , partially offset by increased content per vehicle .

● Commercial transportation— Our organic net sales increased 16.3% in the first quarter of fiscal 2026 due to growth in the Asia–Pacific and EMEA regions, partially offset by declines in the Americas region.

● Sensors— Our organic net sales decreased 2.3% in the first quarter of fiscal 2026 as a result of declines in transportation applications, partially offset by growth in industrial applications.

Operating Income.

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Nine Months Ended

($ in millions)

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Operating margin

Operating income in the Transportation Solutions segment decreased $44 million and $117 million in the third quarter and first nine months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

Excluding the items below, operating income decreased in the third quarter of fiscal 2025 primarily as a result of net price erosion.

Excluding the items below, operating income decreased in the first nine months of fiscal 2025 primarily as a result of net price erosion and lower volume.

Operating income in the Transportation Solutions segment increased $55 million in the first quarter of fiscal 2026 as compared to the same period of fiscal 2025.

Excluding the items below, operating income increased in the first quarter of fiscal 2026 primarily as a result of higher volume.

Quarters Ended

Nine Months Ended

(in millions)

Restructuring and other charges (credits), net

Taxes (non-income tax) recorded in selling, general, and administrative expenses

Restructuring and other charges, net

Amortization expense

Industrial Solutions

1 unchanged sentence

Quarters Ended

Nine Months Ended

($ in millions)

Digital data networks

Automation and connected living

Aerospace, defense, and marine

Digital data networks

(1) Industry end market information is presented consistently with our internal management reporting and may be revised periodically as management deems necessary.

The following table provides an analysis of the change in the Industrial Solutions segment’s net sales by industry end market:

Change in Net Sales for the Quarter Ended June 27, 2025

Change in Net Sales for the Nine Months Ended June 27, 2025

versus Net Sales for the Quarter Ended June 28, 2024

versus Net Sales for the Nine Months Ended June 28, 2024

Organic Net Sales

Change in Net Sales for the Quarter Ended December 26, 2025

versus Net Sales for the Quarter Ended December 27, 2024

Organic Net Sales

Growth (Decline)

($ in millions)

Digital data networks

Automation and connected living

Aerospace, defense, and marine

Digital data networks

In the Industrial Solutions segment, net sales increased $488 million, or 30.0%, in the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024 due primarily to organic net sales growth of 20.5% and the positive impact of 7.7% from acquisitions.

Richards Manufacturing, which was acquired on April 1, 2025, contributed net sales of $73 million in the third quarter of fiscal 2025.

Our organic net sales by industry end market were as follows:

● Automation and connected living— Our organic net sales increased 5.0% in the third quarter of fiscal 2025 due to growth in the appliances market and factory automation applications.

● Aerospace, defense, and marine— Our organic net sales increased 6.2% in the third quarter of fiscal 2025 primarily as a result of growth in the commercial aerospace and the defense markets.

● Digital data networks —Our organic net sales increased 81.9% in the third quarter of fiscal 2025 due primarily to growth in artificial intelligence applications.

● Energy— Our organic net sales increased 20.2% in the third quarter of fiscal 2025 as a result of growth in the Americas region with strength in renewable energy and grid hardening applications and, to a lesser degree, growth in the EMEA and Asia–Pacific regions.

● Medical— Our organic net sales decreased 13.5% in the third quarter of fiscal 2025 due primarily to reduced demand resulting from inventory corrections in the supply chain.

Net sales in the Industrial Solutions segment increased $912 million, or 19.7%, in the first nine months of fiscal 2025 as compared to the first nine months of fiscal 2024 due primarily to organic net sales growth of 15.2% and the positive impact of 4.6% from acquisitions.

Richards Manufacturing contributed net sales of $73 million in the first nine months of fiscal 2025.

In the Industrial Solutions segment, net sales increased $609 million, or 38.2%, in the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025 due primarily to organic net sales growth of 26.3% and the positive impact of 9.5% from acquisitions.

Richards Manufacturing, which was acquired in the third quarter of fiscal 2025, contributed net sales of $107 million in the first quarter of fiscal 2026.

Net pricing actions positively affected organic net sales by $28 million in the first quarter of fiscal 2026.

Our organic net sales by industry end market were as follows:

● Automation and connected living— Our organic net sales increased 0.9% in the first nine months of fiscal 2025 as a result of strength in the appliances market, partially offset by weakness in factory automation applications.

● Aerospace, defense, and marine— Our organic net sales increased 10.5% in the first nine months of fiscal 2025 primarily as a result of growth in the commercial aerospace and the defense markets.

● Digital data networks —Our organic net sales increased 69.9% in the first nine months of fiscal 2025 due primarily to growth in artificial intelligence and cloud applications.

● Energy— Our organic net sales increased 11.6% in the first nine months of fiscal 2025 due to growth in the Americas region driven by renewable energy and grid hardening applications and, to a lesser degree, growth in the EMEA and Asia–Pacific regions.

● Medical— Our organic net sales decreased 17.2% in the first nine months of fiscal 2025 primarily as a result of reduced demand resulting from inventory corrections in the supply chain.

● Digital data networks —Our organic net sales increased 69.7% in the first quarter of fiscal 2026 due primarily to growth in artificial intelligence and cloud applications.

● Automation and connected living— Our organic net sales increased 11.6% in the first quarter of fiscal 2026 due primarily to growth in factory automation applications.

● Aerospace, defense, and marine— Our organic net sales increased 10.9% in the first quarter of fiscal 2026 primarily as a result of growth in the defense and commercial aerospace markets.

● Energy— Our organic net sales increased 14.6% in the first quarter of fiscal 2026 as a result of growth across all regions.

● Medical— Our organic net sales increased 5.3% in the first quarter of fiscal 2026 due primarily to growth in interventional medical applications.

Operating Income.

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Quarters Ended

Nine Months Ended

($ in millions)

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Operating margin

Operating income in the Industrial Solutions segment increased $146 million and $267 million in the third quarter and first nine months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

Excluding the items below, operating income increased in the third quarter and first nine months of fiscal 2025 primarily as a result of higher volume.

Operating income in the Industrial Solutions segment increased $218 million in the first quarter of fiscal 2026 as compared to the same period of fiscal 2025.

Excluding the items below, operating income increased in the first quarter of fiscal 2026 primarily as a result of higher volume.

Quarters Ended

Nine Months Ended

(in millions)

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Restructuring and other charges, net

Taxes (non-income tax) recorded in selling, general, and administrative expenses

Amortization expense

Liquidity and Capital Resources

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We believe that cash generated from operations and, to the extent necessary, these other sources of potential funding will be sufficient to meet our anticipated capital needs for the foreseeable future, including the repayment of $500 million of 4.50% senior notes and $350 million of 3.70% senior notes, both due in February 2026.

Also, we may use funds to acquire strategic businesses or product lines, reduce our outstanding debt, or return cash to shareholders through dividends on our ordinary shares or purchases of our ordinary shares pursuant to our authorized share repurchase program.

Also, we may use excess cash and other funding to acquire strategic businesses or product lines, reduce our outstanding debt, or return cash to shareholders through dividends on our ordinary shares or purchases of our ordinary shares pursuant to our authorized share repurchase program.

The cost or availability of future funding may be impacted by financial market conditions.

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Cash Flows from Operating Activities

In the first nine months of fiscal 2025, net cash provided by operating activities increased $283 million to $2,718 million from $2,435 million in the first nine months of fiscal 2024.

The increase resulted primarily from a reduction in net income tax payments and higher pre-tax income, partially offset by the impact of changes in working capital levels.

The amount of income taxes paid, net of refunds, during the first nine months of fiscal 2025 and 2024 was $184 million and $384 million, respectively.

In the first quarter of fiscal 2026, net cash provided by operating activities decreased $13 million to $865 million from $878 million in the first quarter of fiscal 2025.

The decrease resulted primarily from the impact of changes in working capital levels, partially offset by higher pre-tax income.

The amount of income taxes paid, net of refunds, during the first quarters of fiscal 2026 and 2025 was $88 million and $49 million, respectively.

Cash Flows from Investing Activities

Capital expenditures were $665 million and $467 million in the first nine months of fiscal 2025 and 2024, respectively.

Capital expenditures were $258 million and $205 million in the first quarters of fiscal 2026 and 2025, respectively.

We expect fiscal 2026 capital spending levels to be approximately 6% of net sales.

We believe our capital funding levels are adequate to support new programs, and we continue to invest in our manufacturing infrastructure to further enhance productivity and manufacturing capabilities.

During the first nine months of fiscal 2025, we acquired Richards Manufacturing for $2.3 billion, net of cash acquired.

Also during the first nine months of fiscal 2025, we acquired two additional businesses for a combined cash purchase price of $321 million, net of cash acquired.

We acquired one business for a cash purchase price of $339 million, net of cash acquired, during the first nine months of fiscal 2024.

During the first quarter of fiscal 2025, we acquired two businesses for a combined cash purchase price of $325 million, net of cash acquired.

See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding acquisitions.

During the first nine months of fiscal 2024, we received net cash proceeds of $59 million related to the sale of one business.

See Note 2 to the Condensed Consolidated Financial Statements for additional information.

Cash Flows from Financing Activities and Capitalization

Total debt at June 27, 2025 and September 27, 2024 was $5,697 million and $4,203 million, respectively.

Total debt at December 26, 2025 and September 26, 2025 was $5,708 million and $5,694 million, respectively.

See Note 7 to the Condensed Consolidated Financial Statements for additional information regarding debt.

During the third quarter of fiscal 2025, Tyco Electronics Group S.A.

(“TEGSA”), our wholly-owned subsidiary, issued €500 million aggregate principal amount of 2.50% senior notes due in May 2028, $450 million aggregate principal amount of 4.50% senior notes due in February 2031, and $450 million aggregate principal amount of 5.00% senior notes due in May 2035.

In connection with the issuance of these senior notes, we voluntarily elected to terminate the $1.5 billion 364-day credit agreement, dated as of March 14, 2025.

The net proceeds from these senior notes were used for general corporate purposes, including the repayment of indebtedness incurred in connection with the acquisition of Richards Manufacturing.

See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding this acquisition.

During the first nine months of fiscal 2025, TEGSA issued €750 million aggregate principal amount of 3.25% senior notes due in January 2033.

The notes issued during the third quarter and first nine months of fiscal 2025 are TEGSA’s unsecured senior obligations and rank equally in right of payment with all existing and any future senior indebtedness of TEGSA and senior to any subordinated indebtedness that TEGSA may incur.

During the first nine months of fiscal 2025, TEGSA repaid, at maturity, €550 million of 0.00% senior notes due in February 2025.

At September 27, 2024, TEGSA had $255 million of commercial paper outstanding at a weighted-average interest rate of 4.95%.

TEGSA had no commercial paper outstanding at June 27, 2025.

Tyco Electronics Group S.A.

(“TEGSA”), our wholly-owned subsidiary, had no commercial paper outstanding at December 26, 2025 or September 26, 2025.

TEGSA has a five-year unsecured senior revolving credit facility (“Credit Facility”) with a maturity date of April 2029 and aggregate commitments of $1.5 billion.

TEGSA had no borrowings under the Credit Facility at June 27, 2025 or September 27, 2024.

The Credit Facility contains a financial ratio covenant providing that if, as of the last day of each fiscal quarter, our ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in the Credit Facility) for the then most recently concluded period of four consecutive fiscal quarters exceeds 3.75 to 1.0, an Event of Default (as defined in the Credit Facility) is triggered.

TEGSA had no borrowings under the Credit Facility at December 26, 2025 or September 26, 2025.

The Credit Facility contains a financial ratio covenant providing that if, as of the last day of each fiscal quarter, our ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in the Credit Facility) for the then most recently concluded period of four consecutive fiscal quarters exceeds 3.75 (or temporarily 4.25 following a qualified acquisition) to 1.0, an Event of Default (as defined in the Credit Facility) is triggered.

The Credit Facility and our other debt agreements contain other customary covenants.

None of our covenants are presently considered restrictive to our operations.

As of June 27, 2025, we were in compliance with all of our debt covenants and believe that we will continue to be in compliance with our existing covenants for the foreseeable future.

As of December 26, 2025, we were in compliance with all of our debt covenants and believe that we will continue to be in compliance with our existing covenants for the foreseeable future.

In addition to the Credit Facility, TEGSA is the borrower under our senior notes and commercial paper.

Payment obligations under TEGSA’s senior notes, commercial paper, and Credit Facility are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc.

Payments of ordinary/common share dividends to shareholders were $594 million and $564 million in the first nine months of fiscal 2025 and 2024, respectively.

In June 2025, our board of directors declared a regular quarterly dividend of $0.71 per ordinary share, payable on September 12, 2025, to shareholders of record on August 22, 2025.

During the first nine months of fiscal 2025, our board of directors authorized an increase of $2.5 billion in our share repurchase program.

We repurchased approximately six million of our ordinary shares for $916 million and approximately nine million of our common shares for $1,235 million under the share repurchase program during the first nine months of fiscal 2025 and 2024, respectively.

At June 27, 2025, we had $1.8 billion of availability remaining under our share repurchase authorization.

Payments of ordinary share dividends to shareholders were $209 million and $189 million in the first quarters of fiscal 2026 and 2025, respectively.

In December 2025, our Board of Directors declared a regular quarterly cash dividend of $0.71 per ordinary share, payable on March 13, 2026, to shareholders of record on February 20, 2026.

Ordinary shares repurchased under the share repurchase program were as follows:

Quarters Ended

(in millions)

Number of ordinary shares repurchased

Repurchase value

At December 26, 2025, we had $983 million of availability remaining under our share repurchase authorization.

Summarized Guarantor Financial Information

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In addition to being the issuer of our debt securities, TEGSA owns, directly or indirectly, all of our operating subsidiaries.

The following tables present summarized financial information, excluding investments in and equity in earnings of our non-guarantor subsidiaries, for TE Connectivity plc, TE Connectivity Switzerland Ltd., and TEGSA on a combined basis.

The following tables present summarized financial information, excluding investments in and equity

in earnings of our non-guarantor subsidiaries, for TE Connectivity plc, TE Connectivity Switzerland Ltd., and TEGSA on a combined basis.

September 26,

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Total noncurrent liabilities (2)

(1) Includes $2,969 million and $2,368 million as of June 27, 2025 and September 27, 2024, respectively, of intercompany loans receivable from non-guarantor subsidiaries.

(2) Includes $5,925 million and $7,309 million as of June 27, 2025 and September 27, 2024, respectively, of intercompany loans payable to non-guarantor subsidiaries.

Nine Months Ended

(1) Includes $3,158 million and $2,444 million as of December 26, 2025 and September 26, 2025, respectively, of intercompany loans receivable from non-guarantor subsidiaries.

(2) Includes $6,219 million and $5,001 million as of December 26, 2025 and September 26, 2025, respectively, of intercompany loans payable to non-guarantor subsidiaries.

Quarter Ended

Fiscal Year Ended

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Statement of Operations Data:

Loss from continuing operations

Income (loss) from continuing operations

Net income (loss)

In certain instances, we have guaranteed the performance of third parties and provided financial guarantees for uncompleted work and financial commitments.

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We do not expect that these uncertainties will have a material adverse effect on our results of operations, financial position, or cash flows.

At June 27, 2025, we had outstanding letters of credit, letters of guarantee, and surety bonds of $217 million.

At December 26, 2025, we had outstanding letters of credit, letters of guarantee, and surety bonds of $245 million.

Commitments and Contingencies

Legal Proceedings

In the normal course of business, we are subject to various legal proceedings and claims, including patent infringement claims, product liability matters, employment disputes, disputes on agreements, other commercial disputes, environmental matters, antitrust claims, and tax matters, including non-income tax matters such as value added tax, sales and use tax, real estate tax, and transfer tax.

In the normal course of business, we are subject to various legal proceedings and claims, including patent infringement claims, product liability matters, employment disputes, disputes on agreements, other commercial disputes, environmental matters, antitrust claims, trade compliance matters, and tax matters, including non-income tax matters such as value added tax, sales and use tax, real estate tax, and transfer tax.

Although it is not feasible to predict the outcome of these proceedings, based upon our experience, current information, and applicable law, we do not expect that the outcome of these proceedings, either individually or in the aggregate, will have a material effect on our results of operations, financial position, or cash flows.

Trade Compliance Matters

As part of our ongoing internal compliance activities, we have been investigating compliance with relevant country of origin for import matters and recently made a voluntary disclosure to the U.S.

Customs and Border Protection Agency regarding potential Section 301 unpaid duties, fees, and interest for certain imported products into the U.S.

We are unable to predict the timing and final outcome of investigation into this matter.

An unfavorable outcome may include unpaid duties, fees, interest, and penalties imposed in response to our disclosures.

Based on currently available information, we have reserved an aggregate of $27 million related to this exposure.

The investigation into this matter has yet to be completed and the final outcome of such investigation and related duties, fees, interest, and potential penalties may differ from amounts currently reserved.

Critical Accounting Policies and Estimates

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Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and the Consolidated Financial Statements and accompanying notes contained in our Annual Report on Form 10-K for the fiscal year ended September 26, 2025.

There were no significant changes to this information during the first nine months of fiscal 2025.

Accounting Pronouncement

See Note 1 to the Condensed Consolidated Financial Statements for additional information regarding a recently issued accounting pronouncement.

There were no significant changes to this information during the first quarter of fiscal 2026.

Non-GAAP Financial Measure

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis