TE Connectivity plc 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements as a result of many factors, including but not limited to those under the heading “Forward-Looking Information” and “Part II. Item 1A. Risk Factors.” Our Condensed Consolidated Financial Statements have been prepared in United States (“U.S.”) dollars, in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The following discussion includes organic net sales growth (decline) which is a non-GAAP financial measure. See “Non-GAAP Financial Measure” for additional information regarding this measure. Overview 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. 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 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 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 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. 17 Table of Contents Outlook 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 $0.05 per share, respectively, in the second quarter of fiscal 2026 as compared to the same period of fiscal 2025 and includes the impact of currently enacted tariffs and our planned mitigation of those tariffs. Also, this outlook is based on foreign currency exchange rates and commodity prices that are consistent with current levels. Results of Operations Net Sales The following table presents our net sales and the percentage of total net sales by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ December 26, ​ ​ December 27, ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ ($ in millions) Transportation Solutions ​ $ 2,467 ​ 53 % ​ $ 2,243 ​ 58 % ​ Industrial Solutions ​ 2,202 47 ​ ​ 1,593 42 ​ ​ Total ​ $ 4,669 100 % ​ $ 3,836 100 % ​ The following table provides an analysis of the change in our net sales by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Net Sales for the Quarter Ended December 26, 2025 ​ ​ versus Net Sales for the Quarter Ended December 27, 2024 ​ ​ Net Sales ​ Organic Net Sales ​ ​ ​ ​ ​ ​ ​ ​ Growth ​ Growth ​ Translation ​ Acquisitions ​ ​ ​ ​ ($ in millions) Transportation Solutions $ 224 10.0 % $ 158 7.0 % $ 66 ​ $ — ​ Industrial Solutions 609 38.2 ​ 419 26.3 ​ 38 ​ 152 ​ Total $ 833 21.7 % $ 577 15.0 % $ 104 ​ $ 152 ​ 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 $107 million in the first quarter of fiscal 2026. See further discussion of net sales below under “Segment Results.” Net Sales by Geographic Region. Our business operates in three geographic regions—Asia–Pacific, Europe/Middle East/Africa (“EMEA”), and the Americas—and our results of operations are influenced by changes in foreign currency exchange rates. Increases or decreases in the value of the U.S. dollar, compared to other currencies, will directly affect our reported results as we translate those currencies into U.S. dollars at the end of each fiscal period. Approximately 60% of our net sales were invoiced in currencies other than the U.S. dollar in the first quarter of fiscal 2026. 18 Table of Contents The following table presents our net sales and the percentage of total net sales by geographic region (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ December 26, ​ ​ December 27, ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) Asia–Pacific ​ $ 2,006 43 % ​ $ 1,603 42 % ​ EMEA ​ ​ 1,440 ​ 31 ​ ​ ​ 1,229 ​ 32 ​ ​ Americas ​ 1,223 26 ​ ​ 1,004 26 ​ ​ Total ​ $ 4,669 100 % ​ $ 3,836 100 % ​ (1) Net sales to external customers are attributed to individual countries based on the legal entity that records the sale. The following table provides an analysis of the change in our net sales by geographic region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Net Sales for the Quarter Ended December 26, 2025 ​ ​ ​ versus Net Sales for the Quarter Ended December 27, 2024 ​ ​ ​ Net Sales ​ Organic Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Growth ​ ​ ​ Growth ​ ​ ​ Translation ​ ​ ​ Acquisitions ​ ​ ​ ​ ​ ($ in millions) Asia–Pacific ​ $ 403 25.1 % $ 392 24.5 % $ 11 ​ $ — ​ EMEA ​ ​ 211 ​ 17.2 ​ ​ 123 ​ 10.0 ​ ​ 88 ​ ​ — ​ Americas ​ 219 21.8 ​ 62 6.2 ​ 5 ​ 152 ​ Total ​ $ 833 21.7 % $ 577 15.0 % $ 104 ​ $ 152 ​ Cost of Sales and Gross Margin The following table presents cost of sales and gross margin information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ ​ ​ December 26, ​ ​ December 27, ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ Change ​ ​ ​ ​ ​ ($ in millions) Cost of sales ​ $ 2,930 ​ ​ $ 2,476 ​ ​ $ 454 ​ As a percentage of net sales ​ 62.8 % ​ 64.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ $ 1,739 ​ ​ $ 1,360 ​ ​ $ 379 ​ As a percentage of net sales ​ 37.2 % ​ 35.5 % ​ ​ ​ 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. Cost of sales and gross margin are subject to variability in raw material prices, which continue to fluctuate for many of the raw materials we use. The following table presents the average prices incurred related to copper, gold, silver, and palladium: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ December 26, ​ December 27, ​ ​ ​ ​ Measure ​ ​ ​ 2025 ​ ​ ​ 2024 Copper Lb. ​ $ 4.57 ​ $ 4.09 Gold Troy oz. ​ 3,198 ​ 2,305 Silver ​ Troy oz. ​ ​ 37.67 ​ ​ 27.75 Palladium Troy oz. ​ 1,136 ​ 1,144 19 Table of Contents 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. Operating Expenses The following table presents operating expense information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ ​ ​ ​ December 26, ​ ​ December 27, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ Change ​ ​ ​ ​ ​ ($ in millions) ​ Selling, general, and administrative expenses ​ $ 538 ​ ​ $ 427 ​ ​ $ 111 ​ As a percentage of net sales ​ 11.5 % ​ 11.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restructuring and other charges, net ​ $ 10 ​ ​ $ 50 ​ ​ $ (40) ​ Selling, General, and Administrative Expenses. 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. We are committed to continuous productivity improvements, and we evaluate opportunities to simplify our global manufacturing footprint, migrate facilities to lower-cost regions, reduce fixed costs, and eliminate excess capacity. 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 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 $110 million. See Note 2 to the Condensed Consolidated Financial Statements for additional information regarding net restructuring and other charges. Operating Income The following table presents operating income and operating margin information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ ​ ​ ​ December 26, ​ ​ December 27, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ Change ​ ​ ​ ​ ​ ($ in millions) ​ Operating income ​ $ 963 ​ ​ $ 690 ​ ​ $ 273 ​ Operating margin ​ 20.6 % ​ 18.0 % ​ ​ ​ 20 Table of Contents Operating income included the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ Quarters Ended ​ ​ ​ December 26, ​ December 27, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ (in millions) ​ Acquisition-related charges: ​ ​ ​ ​ ​ Acquisition and integration costs ​ $ 3 ​ $ 5 ​ Charges associated with the amortization of acquisition-related fair value adjustments ​ 3 ​ — ​ ​ ​ 6 ​ 5 ​ Restructuring and other charges, net ​ 10 ​ 50 ​ Amortization expense ​ ​ 57 ​ ​ 39 ​ Total ​ $ 73 ​ $ 94 ​ See discussion of operating income below under “Segment Results.” Non-Operating Items The following table presents select non-operating information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ ​ ​ ​ December 26, ​ ​ December 27, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ Change ​ ​ ​ ​ ​ ($ in millions) ​ Interest expense ​ $ 30 ​ ​ $ 6 ​ ​ $ 24 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ $ 210 ​ ​ $ 178 ​ ​ $ 32 ​ Effective tax rate ​ 21.9 % ​ 25.2 % ​ ​ ​ Interest Expense. Interest expense increased $24 million in the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025 due primarily to higher average debt levels and cost of debt. Income Taxes. See Note 12 to the Condensed Consolidated Financial Statements for discussion of income taxes. ​ Segment Results Transportation Solutions Net Sales. The following table presents the Transportation Solutions segment’s net sales and the percentage of total net sales by industry end market: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ December 26, ​ ​ December 27, ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Automotive ​ $ 1,885 ​ ​ ​ 76 % ​ $ 1,722 ​ ​ ​ 77 % ​ Commercial transportation ​ 370 15 ​ ​ 312 14 ​ ​ Sensors ​ 212 9 ​ ​ 209 9 ​ ​ Total ​ $ 2,467 100 % ​ $ 2,243 100 % ​ 21 Table of Contents 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 December 26, 2025 ​ ​ ​ versus Net Sales for the Quarter Ended December 27, 2024 ​ ​ ​ ​ ​ Net Sales ​ ​ ​ Organic Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Growth ​ Growth (Decline) ​ Translation ​ ​ ($ in millions) Automotive ​ $ 163 ​ 9.5 % $ 112 ​ 6.5 % $ 51 ​ Commercial transportation ​ 58 18.6 ​ 51 16.3 ​ 7 ​ Sensors ​ 3 1.4 ​ (5) (2.3) ​ 8 ​ Total ​ $ 224 10.0 % $ 158 7.0 % $ 66 ​ 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 $22 million in the first quarter of fiscal 2026. Our organic net sales by industry end market were as follows: ● Automotive— Our organic net sales increased 6.5% in the first quarter of fiscal 2026 as a result of growth of 9.9% in the Asia–Pacific region and 3.9% in the EMEA region, partially offset by declines of 0.5% in the Americas region . Our organic net sales growth in the Asia–Pacific and EMEA regions was due primarily to increased content per vehicle. In the Americas region, our organic net sales declined due to declines in vehicle production , partially offset by increased content per vehicle . ● Commercial transportation— Our organic net sales increased 16.3% in the first quarter of fiscal 2026 due to growth in the Asia–Pacific and EMEA regions, partially offset by declines in the Americas region. ● Sensors— Our organic net sales decreased 2.3% in the first quarter of fiscal 2026 as a result of declines in transportation applications, partially offset by growth in industrial applications. Operating Income. The following table presents the Transportation Solutions segment’s operating income and operating margin information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ ​ ​ December 26, ​ December 27, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Change ​ ​ ​ ​ ​ ($ in millions) ​ Operating income ​ $ 501 ​ $ 446 ​ $ 55 ​ Operating margin ​ 20.3 % 19.9 % ​ ​ 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ Quarters Ended ​ ​ ​ December 26, ​ December 27, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ (in millions) ​ Restructuring and other charges, net ​ $ 4 ​ $ 32 ​ Amortization expense ​ ​ 18 ​ ​ 17 ​ Total ​ $ 22 ​ $ 49 ​ 22 Table of Contents Industrial Solutions Net Sales. The following table presents the Industrial Solutions segment’s net sales and the percentage of total net sales by industry end market: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ December 26, ​ ​ December 27, ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) ​ Digital data networks ​ $ 707 ​ 32 % ​ $ 413 ​ 26 % ​ Automation and connected living ​ ​ 549 25 ​ ​ ​ 479 30 ​ ​ Aerospace, defense, and marine ​ ​ 381 ​ 17 ​ ​ ​ 334 ​ 21 ​ ​ Energy ​ 406 19 ​ ​ 216 14 ​ ​ Medical ​ ​ 159 7 ​ ​ ​ 151 ​ 9 ​ ​ Total ​ $ 2,202 100 % ​ $ 1,593 100 % ​ 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 December 26, 2025 ​ ​ ​ versus Net Sales for the Quarter Ended December 27, 2024 ​ ​ ​ Net Sales ​ Organic Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Growth ​ ​ ​ Growth ​ ​ ​ Translation ​ ​ ​ Acquisitions ​ ​ ​ ​ ​ ($ in millions) Digital data networks ​ $ 294 ​ 71.2 % $ 288 ​ 69.7 % $ 6 ​ $ — ​ Automation and connected living ​ ​ 70 14.6 ​ ​ 55 11.6 ​ ​ 14 ​ ​ 1 ​ Aerospace, defense, and marine ​ 47 ​ 14.1 ​ ​ 36 ​ 10.9 ​ ​ 11 ​ ​ — ​ Energy ​ ​ 190 88.0 ​ 32 14.6 ​ 7 ​ 151 ​ Medical ​ 8 5.3 ​ 8 5.3 ​ — ​ — ​ Total ​ $ 609 38.2 % $ 419 26.3 % $ 38 ​ $ 152 ​ 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 $28 million in the first quarter of fiscal 2026. Our organic net sales by industry end market were as follows: ● Digital data networks —Our organic net sales increased 69.7% in the first quarter of fiscal 2026 due primarily to growth in artificial intelligence and cloud applications. ● Automation and connected living— Our organic net sales increased 11.6% in the first quarter of fiscal 2026 due primarily to growth in factory automation applications. ● Aerospace, defense, and marine— Our organic net sales increased 10.9% in the first quarter of fiscal 2026 primarily as a result of growth in the defense and commercial aerospace markets. ● Energy— Our organic net sales increased 14.6% in the first quarter of fiscal 2026 as a result of growth across all regions. ● Medical— Our organic net sales increased 5.3% in the first quarter of fiscal 2026 due primarily to growth in interventional medical applications. 23 Table of Contents Operating Income. The following table presents the Industrial Solutions segment’s operating income and operating margin information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ ​ ​ ​ Quarters Ended ​ ​ ​ ​ ​ ​ December 26, ​ December 27, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Change ​ ​ ​ ​ ​ ($ in millions) ​ Operating income ​ $ 462 ​ $ 244 ​ $ 218 ​ Operating margin ​ 21.0 % 15.3 % ​ ​ 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ Quarters Ended ​ ​ ​ December 26, ​ December 27, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ (in millions) ​ Acquisition-related charges: ​ ​ ​ ​ Acquisition and integration costs ​ $ 3 ​ $ 5 ​ Charges associated with the amortization of acquisition-related fair value adjustments ​ 3 ​ — ​ ​ ​ 6 ​ 5 ​ Restructuring and other charges, net ​ 6 ​ 18 ​ Amortization expense ​ ​ 39 ​ ​ 22 ​ Total ​ $ 51 ​ $ 45 ​ ​ ​ Liquidity and Capital Resources Our ability to fund our future capital needs will be affected by our ongoing ability to generate cash from operations and may be affected by our access to capital markets, money markets, or other sources of funding, as well as the capacity and terms of our financing arrangements. 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 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. We will continue to monitor financial markets and respond as necessary to changing conditions. We believe that we have sufficient financial resources and liquidity which will enable us to meet our ongoing working capital and other cash flow needs. Cash Flows from Operating Activities 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 $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. 24 Table of Contents 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. Cash Flows from Financing Activities and Capitalization 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. 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 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 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 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ Quarters Ended ​ ​ ​ December 26, ​ December 27, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ ​ (in millions) ​ Number of ordinary shares repurchased ​ 2 ​ 2 ​ Repurchase value $ 406 $ 310 ​ At December 26, 2025, we had $983 million of availability remaining under our share repurchase authorization. Summarized Guarantor Financial Information As discussed above, our senior notes, commercial paper, and Credit Facility are issued by TEGSA and are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc. 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 25 Table of Contents in earnings of our non-guarantor subsidiaries, for TE Connectivity plc, TE Connectivity Switzerland Ltd., and TEGSA on a combined basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 26, ​ September 26, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ ​ ​ (in millions) ​ Balance Sheet Data: ​ ​ ​ ​ ​ ​ ​ Total current assets ​ $ 1,283 ​ $ 1,236 ​ Total noncurrent assets (1) ​ 3,223 ​ 2,465 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total current liabilities ​ 1,369 ​ 1,348 ​ Total noncurrent liabilities (2) ​ ​ 11,262 ​ ​ 10,033 ​ (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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarter Ended ​ Fiscal Year Ended ​ ​ ​ December 26, ​ September 26, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2025 ​ ​ ​ ​ ​ (in millions) ​ Statement of Operations Data: ​ ​ ​ ​ ​ ​ ​ Income (loss) from continuing operations ​ $ 13 ​ $ (197) ​ Net income (loss) ​ 13 ​ (197) ​ Guarantees In certain instances, we have guaranteed the performance of third parties and provided financial guarantees for uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from fiscal 2026 through the completion of such transactions. The guarantees would be triggered in the event of nonperformance, and the potential exposure for nonperformance under the guarantees would not have a material effect on our results of operations, financial position, or cash flows. In disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover various risks including unknown damage to assets, environmental risks involved in the sale of real estate, liability for investigation and remediation of environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not expect that these uncertainties will have a material adverse effect on our results of operations, financial position, or cash flows. 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, 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. 26 Table of Contents 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 The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses. Our accounting policies for revenue recognition, goodwill and other intangible assets, income taxes, and pension plans are based on, among other things, judgments and assumptions made by management. For additional information regarding these policies and the underlying accounting assumptions and estimates used in these policies, refer to “Part II. Item 7. 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 quarter of fiscal 2026. Non-GAAP Financial Measure Organic Net Sales Growth (Decline) We present organic net sales growth (decline) as we believe it is appropriate for investors to consider this adjusted financial measure in addition to results in accordance with GAAP. Organic net sales growth (decline) represents net sales growth (decline) (the most comparable GAAP financial measure) excluding the impact of foreign currency exchange rates, and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic net sales growth (decline) is a useful measure of our performance because it excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition and divestiture activity. Organic net sales growth (decline) provides useful information about our results and the trends of our business. Management uses this measure to monitor and evaluate performance. Also, management uses this measure together with GAAP financial measures in its decision-making processes related to the operations of our reportable segments and our overall company. It is also a significant component in our incentive compensation plans. We believe that investors benefit from having access to the same financial measures that management uses in evaluating operations. The tables presented in “Results of Operations” and “Segment Results” provide reconciliations of organic net sales growth (decline) to net sales growth (decline) calculated in accordance with GAAP. Organic net sales growth (decline) is a non-GAAP financial measure and should not be considered a replacement for results in accordance with GAAP. This non-GAAP financial measure may not be comparable to similarly-titled measures reported by other companies. The primary limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using organic net sales growth (decline) in combination with net sales growth (decline) to better understand the amounts, character, and impact of any increase or decrease in reported amounts. 27 Table of Contents Forward-Looking Information Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These statements are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among others, the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, acquisitions, divestitures, the effects of competition, and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” and “should,” or the negative of these terms or similar expressions. Forward-looking statements involve risks, uncertainties, and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. Investors should not place undue reliance on any forward-looking statements. We do not have any intention or obligation to update forward-looking statements after we file this report except as required by law. The following and other risks, which are described in greater detail in “Part I. Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended September 26, 2025, and in this report, could cause our results to differ materially from those expressed in forward-looking statements: ● conditions in the global or regional economies and global capital markets, and cyclical industry conditions, including recession, inflation, tariffs, and higher interest rates; ● conditions affecting demand for products in the industries we serve, particularly the automotive industry; ● risk of future goodwill impairment; ● pricing pressure and competition, including competitive risks associated with the pace of technological change; ● market acceptance of our new product introductions and product innovations and product life cycles; ● raw material availability, quality, and cost; ● product liability, warranty, and product recall claims and our ability to defend such claims; ● fluctuations in foreign currency exchange rates and impacts of offsetting hedges; ● financial condition and consolidation of customers and vendors; ● reliance on third-party suppliers; ● risks associated with current and future acquisitions and divestitures; ● global risks of business interruptions due to natural disasters or other disasters which have impacted and could continue to negatively impact our results of operations as well as customer behaviors, business, and manufacturing operations as well as our facilities and the facilities of our suppliers, and other aspects of our business; ● global risks of political, economic, and military instability, including the continuing military conflicts in certain parts of the world, and volatile and uncertain economic conditions and the evolving regulatory system in China; 28 Table of Contents ● risks associated with cybersecurity incidents and other disruptions to our information technology infrastructure, including as a result of artificial intelligence; ● risks related to compliance with current and future environmental and other laws and regulations, including those related to climate change; ● risks related to the increasing scrutiny and expectations regarding environmental, social, and governance matters; ● risks associated with compliance with applicable antitrust or competition laws or applicable trade regulations; ● our ability to protect our intellectual property rights; ● risks of litigation, regulatory actions, and compliance issues; ● our ability to operate within the limitations imposed by our debt instruments; ● the possible effects on us of various non-U.S. and U.S. legislative proposals and other initiatives that could materially increase our worldwide corporate effective tax rate, increase global cash taxes, and negatively impact our U.S. government contracts business; ● requirements related to chemical usage, hazardous material content, recycling, and other circular economy initiatives; ● various risks associated with being an Irish corporation; ● the impact of fluctuations in the market price of our shares; and ● the impact of certain provisions of our articles of association on unsolicited takeover proposals. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business.