What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-25 compared with 2025-04-28 · 140 added, 150 removed, 266 unchanged (52% of the section changed)

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New Segment Structure

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

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:

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Summary of Performance

● Our net sales increased 4.4% and 2.3% in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024 due to sales growth in the Industrial Solutions segment, partially offset by sales declines in the Transportation Solutions segment.

Also, on an organic basis, our net sales increased 5.3% and 2.7% in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

● 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.

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.

● Our net sales by segment were as follows:

● Transportation Solutions —Our net sales decreased 3.9% and 5.1% in the second quarter and first six months of fiscal 2025, respectively, as a result of sales declines in all end markets.

● Industrial Solutions —Our net sales increased 17.2% and 14.1% in the second quarter and first six months of fiscal 2025, respectively, primarily as a result of sales growth in the digital data networks, energy, and aerospace, defense, and marine end markets, partially offset by sales declines in the medical end market.

● In March 2025, our board of directors declared a regular quarterly dividend of $0.71 per ordinary share, payable on June 10, 2025, to shareholders of record on May 21, 2025.

● Net cash provided by operating activities was $1,531 million in the first six months of fiscal 2025.

In the third quarter of fiscal 2025, we expect our net sales to be approximately $4.3 billion, as compared to $4.0 billion in the third quarter of fiscal 2024.

We expect sales growth in the Industrial Solutions segment, which will benefit from the recently completed acquisition of Richards Manufacturing Co.

(“Richards Manufacturing”), to be partially offset by sales declines in the Transportation Solutions segment.

In the third quarter of fiscal 2025, we expect diluted earnings per share from continuing operations to be approximately $2.02 per share.

This outlook 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 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.

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

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

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.

On April 1, 2025, we acquired Richards Manufacturing, a U.S.-based producer of overhead and underground electrical and gas distribution products, for cash of approximately $2.3 billion, net of cash acquired.

The transaction is subject to post-closing adjustments.

The acquired business will be reported as part of our Energy business within our Industrial Solutions segment from the date of acquisition.

See Note 17 to the Condensed Consolidated Financial Statements for additional information.

Results of Operations

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Quarters Ended

Six Months 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 March 28, 2025

Change in Net Sales for the Six Months Ended March 28, 2025

versus Net Sales for the Quarter Ended March 29, 2024

versus Net Sales for the Six Months Ended March 29, 2024

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

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Growth (Decline)

(Divestiture)

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Industrial Solutions

Net sales increased $176 million, or 4.4%, in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024 due to organic net sales growth of 5.3% and the positive impact of 1.1% from acquisitions, partially offset by the negative impact of foreign currency translation of 2.0% due to the weakening of certain foreign currencies.

Price erosion adversely affected organic net sales by $8 million in the second quarter of fiscal 2025.

In the first six months of fiscal 2025, net sales increased $181 million, or 2.3%, as compared to the first six months of fiscal 2024 due to organic net sales growth of 2.7% and the net positive impact of 0.9% from acquisitions and a divestiture, partially offset by the negative impact of foreign currency translation of 1.3% due to the weakening of certain foreign currencies.

Price erosion adversely affected organic net sales by $20 million in the first six months of fiscal 2025.

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.

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

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

dollar in the first six months of fiscal 2025.

dollar in the first nine months of fiscal 2025.

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

Quarters Ended

Six Months Ended

Nine Months Ended

($ in millions)

1 unchanged sentence

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

Change in Net Sales for the Quarter Ended March 28, 2025

Change in Net Sales for the Six Months Ended March 28, 2025

versus Net Sales for the Quarter Ended March 29, 2024

versus Net Sales for the Six Months Ended March 29, 2024

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

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Growth (Decline)

(Divestiture)

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Quarters Ended

Six Months Ended

Nine Months Ended

($ in millions)

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As a percentage of net sales

Gross margin increased $96 million and $132 million in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024 due primarily to higher volume.

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.

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

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Quarters Ended

Six Months Ended

Nine Months Ended

We expect to purchase approximately 190 million pounds of copper, 110,000 troy ounces of gold, 1.7 million troy ounces of silver, and 13,000 troy ounces of palladium in fiscal 2025.

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Quarters Ended

Six Months 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 $10 million and $13 million in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024 due primarily to increased selling expenses to support higher sales levels, partially offset by the release of reserves associated with trade compliance matters.

For additional information regarding trade compliance matters, see Note 9 to the Condensed Consolidated Financial Statements.

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.

Restructuring and Other Charges, Net.

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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 $87 million during the first six months of fiscal 2025, of which $77 million related to the fiscal 2025 restructuring program.

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

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.

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

For fiscal 2025, we expect total restructuring charges to be approximately $110 million and total cash spend, which will be funded with cash from operations, to be approximately $200 million.

During the first six months of fiscal 2025 and 2024, we incurred costs of $11 million and $8 million, respectively, related to our change in place of incorporation from Switzerland to Ireland.

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.

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Quarters Ended

Six Months Ended

Nine Months Ended

($ in millions)

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Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

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Quarters Ended

Six Months Ended

Nine Months Ended

($ in millions)

Interest expense

Income tax expense (benefit)

Effective tax rate

Interest Expense.

Interest expense decreased $17 million in the first six months of fiscal 2025 as compared to the first six months of fiscal 2024 primarily as a result of our cross-currency swap program that hedges our net investment in certain foreign operations, partially offset by a higher average cost of debt due to rising interest rates.

The aggregate notional value of the cross-currency swap contracts was $5,886 million at March 28, 2025.

Under the terms of these contracts, we receive interest in U.S.

dollars at a weighted-average rate of 2.0% per annum and pay no interest.

See Note 10 to the Condensed Consolidated Financial Statements for additional information regarding our cross-currency swap program.

Income Taxes.

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Quarters Ended

Six Months Ended

Nine Months Ended

($ in millions)

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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 March 28, 2025

Change in Net Sales for the Six Months Ended March 28, 2025

versus Net Sales for the Quarter Ended March 29, 2024

versus Net Sales for the Six Months Ended March 29, 2024

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

1 unchanged sentence

Growth (Decline)

($ in millions)

Commercial transportation

Net sales in the Transportation Solutions segment decreased $93 million, or 3.9%, in the second quarter of fiscal 2025 from the second quarter of fiscal 2024 due to the negative impact of foreign currency translation of 2.4% and organic net sales declines of 1.5%.

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 were flat in the second quarter of fiscal 2025 as growth of 15.9% in the Asia–Pacific region was offset by declines of 11.9% in the EMEA region and 8.2% in the Americas region.

● 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 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.

● Commercial transportation— Our organic net sales decreased 5.1% in the second quarter of fiscal 2025 due to declines in the EMEA and Americas regions, partially offset by growth in the Asia–Pacific region.

● Sensors— Our organic net sales decreased 9.6% in the second quarter of fiscal 2025 as a result of market weakness in both transportation and industrial applications.

In the first six months of fiscal 2025, net sales in the Transportation Solutions segment decreased $243 million, or 5.1%, from the first six months of fiscal 2024 due primarily to organic net sales declines of 3.4% and the negative impact of foreign currency translation of 1.4%.

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%.

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

● Automotive —Our organic net sales decreased 1.3% in the first six months of fiscal 2025 as a result of declines of 14.4% in the EMEA region and 8.1% in the Americas region, partially offset by growth of 12.3% in the Asia–Pacific region.

● 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 8.3% in the first six months of fiscal 2025 primarily as a result of declines in the EMEA and Americas regions.

● Sensors —Our organic net sales decreased 11.1% in the first six months of fiscal 2025 due to market weakness in both transportation and industrial applications.

● 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.

Operating Income.

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Quarters Ended

Six Months Ended

Nine Months Ended

($ in millions)

1 unchanged sentence

Operating margin

Operating income in the Transportation Solutions segment decreased $32 million and $73 million in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

Excluding the items below, operating income decreased in the second quarter and first six months of fiscal 2025 primarily as a result of lower volume and price erosion, partially offset by improved manufacturing productivity.

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.

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

Restructuring and other charges, net

Restructuring and other charges (credits), net

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

2 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

($ in millions)

4 unchanged sentences

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 March 28, 2025

Change in Net Sales for the Six Months Ended March 28, 2025

versus Net Sales for the Quarter Ended March 29, 2024

versus Net Sales for the Six Months Ended March 29, 2024

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

8 unchanged sentences

Digital data networks

In the Industrial Solutions segment, net sales increased $269 million, or 17.2%, in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024 due primarily to organic net sales growth of 15.7%.

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 1.5% in the second quarter of fiscal 2025 due to strength in the appliances market, partially offset by continued weakness in factory automation applications.

● Aerospace, defense, and marine— Our organic net sales increased 10.8% in the second quarter of fiscal 2025 primarily as a result of growth in the defense and the commercial aerospace markets.

● Digital data networks —Our organic net sales increased 78.0% in the second quarter of fiscal 2025 due primarily to growth in artificial intelligence and cloud applications.

● Energy— Our organic net sales increased 7.6% in the second quarter of fiscal 2025 primarily as a result of growth in the Americas region with strength in renewable energy applications.

● Medical— Our organic net sales decreased 13.7% in the second 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 $424 million, or 14.1%, in the first six months of fiscal 2025 as compared to the first six months of fiscal 2024 due primarily to organic net sales growth of 12.3% and, to a lesser degree, the positive impact of 2.9% from acquisitions.

● 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.

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

● Automation and connected living— Our organic net sales decreased 1.4% in the first six months of fiscal 2025 as a result of continued weakness in factory automation applications, partially offset by strength in the appliances market.

● Aerospace, defense, and marine— Our organic net sales increased 12.9% in the first six months of fiscal 2025 primarily as a result of growth in the defense and the commercial aerospace markets.

● Digital data networks —Our organic net sales increased 62.8% in the first six months of fiscal 2025 due primarily to growth in artificial intelligence and cloud applications.

● Energy— Our organic net sales increased 7.2% in the first six months of fiscal 2025 due to growth across all regions and strength in renewable energy applications.

● Medical— Our organic net sales decreased 19.0% in the first six months of fiscal 2025 primarily as a result of reduced demand resulting from inventory corrections in the supply chain.

● 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.

Operating Income.

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Quarters Ended

Six Months Ended

Nine Months Ended

($ in millions)

1 unchanged sentence

Operating margin

Operating income in the Industrial Solutions segment increased $88 million and $121 million in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

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

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.

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

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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.

On April 1, 2025, we acquired Richards Manufacturing for cash of approximately $2.3 billion, net of cash acquired.

In anticipation of the acquisition, we entered into a 364-day senior credit agreement ("364-Day Credit Facility") and issued commercial paper during the second quarter of fiscal 2025.

See additional information regarding debt and the acquisition of Richards Manufacturing in Notes 7 and 17, respectively, to the Condensed Consolidated Financial Statements.

We believe that cash generated from operations and other sources of potential funding will be sufficient to meet our anticipated capital needs for the foreseeable future, including the payment of commercial paper as it matures, as well as the payments of $500 million of 4.50% senior notes and $350 million of 3.70% senior notes, both due in February 2026.

We may use excess cash to purchase a portion of our ordinary shares pursuant to our authorized share repurchase program, to acquire businesses or product lines, to pay dividends on our ordinary shares, or to reduce our outstanding debt.

We may also use excess cash and other funding to make strategic acquisitions.

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.

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 six months of fiscal 2025, net cash provided by operating activities increased $102 million to $1,531 million from $1,429 million in the first six months of fiscal 2024.

The increase resulted primarily from higher pre-tax income and a reduction in income tax payments.

The amount of income taxes paid, net of refunds, during the first six months of fiscal 2025 and 2024 was $164 million and $238 million, respectively.

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.

Cash Flows from Investing Activities

Capital expenditures were $435 million and $318 million in the first six months of fiscal 2025 and 2024, respectively.

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

We expect fiscal 2025 capital spending levels to be approximately 5% 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 six months of fiscal 2025, we acquired two 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 six months of fiscal 2024.

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.

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

During the first six months of fiscal 2024, we received net cash proceeds of $38 million related to the sale of one business.

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 March 28, 2025 and September 27, 2024 was $5,614 million and $4,203 million, respectively.

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

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

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

(“TEGSA”), our wholly-owned subsidiary, issued €750 million aggregate principal amount of 3.25% senior notes due in January 2033.

The notes 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.

As of March 28, 2025, TEGSA had $1.5 billion of commercial paper outstanding at a weighted-average interest rate of 4.64%.

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

In March 2025, TEGSA entered into a 364-Day Credit Facility with total commitments of $1.5 billion.

This increases the size of our commercial paper program as the 364-Day Credit Facility, in addition to the five-year unsecured senior revolving credit facility (“Five-Year Credit Facility”), backs borrowings made under our commercial paper program.

TEGSA had no borrowings under the 364-Day Credit Facility at March 28, 2025.

Borrowings under the 364-Day Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (a) the term secured overnight financing rate (“Term SOFR”) (as defined in the 364-Day Credit Facility) or (b) an alternate base rate equal to the highest of (i) Bank of America, N.A.’s base rate, (ii) the federal funds effective rate plus 1 / 2 of 1%, (iii) the Term SOFR for a one-month interest period plus 1%, and (iv) 1%, plus, in each case, an applicable margin based upon the senior, unsecured, long-term debt rating of TEGSA.

TEGSA is required to pay an annual facility fee.

Based on the applicable credit ratings of TEGSA, this fee ranges from 3.0 to 9.0 basis points of the lenders' commitments under the 364-Day Credit Facility.

TEGSA has a Five-Year Credit Facility with a maturity date of April 2029 and aggregate commitments of $1.5 billion.

TEGSA had no borrowings under the Five-Year Credit Facility at March 28, 2025 or September 27, 2024.

The 364-Day Credit Facility and the Five-Year Credit Facility (together, the “Credit Facilities”) contain financial ratio covenants 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 Facilities) 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 Facilities) is triggered.

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

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.

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.

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 March 28, 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 Facilities, TEGSA is the borrower under our senior notes and commercial paper.

Payment obligations under TEGSA’s senior notes, commercial paper, and Credit Facilities 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 $382 million and $365 million in the first six months of fiscal 2025 and 2024, respectively.

In March 2025, our board of directors declared a regular quarterly dividend of $0.71 per ordinary share, payable on June 10, 2025, to shareholders of record on May 21, 2025.

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

We repurchased approximately four million of our ordinary shares for $615 million and approximately six million of our common shares for $826 million under the share repurchase program during the first six months of fiscal 2025 and 2024, respectively.

At March 28, 2025, we had $2.1 billion of availability remaining under our share repurchase authorization.

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.

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.

Summarized Guarantor Financial Information

As discussed above, our senior notes, commercial paper, and Credit Facilities 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.

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.

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Total noncurrent liabilities (2)

(1) Includes $3,410 million and $2,368 million as of March 28, 2025 and September 27, 2024, respectively, of intercompany loans receivable from non-guarantor subsidiaries.

(2) Includes $7,633 million and $7,309 million as of March 28, 2025 and September 27, 2024, respectively, of intercompany loans payable to non-guarantor subsidiaries.

Six Months Ended

(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

Fiscal Year Ended

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Statement of Operations Data:

Income (loss) from continuing operations

Net income (loss)

Loss from continuing operations

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 March 28, 2025, we had outstanding letters of credit, letters of guarantee, and surety bonds of $191 million, including letters of credit of $22 million associated with the divestiture of our former Subsea Communications business.

We contractually agreed to continue to honor letters of credit related to the business’ projects that existed as of the date of sale;

however, based on historical experience, we do not anticipate having to perform on these guarantees.

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

Commitments and Contingencies

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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 previously disclosed, we had been investigating our past compliance with relevant U.S.

trade controls and had made voluntary disclosures of apparent trade controls violations to the U.S.

State Department’s Directorate of Defense Trade Controls (“DDTC”).

During the second quarter of fiscal 2025, DDTC closed its investigations regarding these matters without fine, penalty, or further action, and we released amounts previously reserved for potential fines and penalties relating to these matters.

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 27, 2024.

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

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

Accounting Pronouncement

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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.

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.

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● the possible effects on us of various non-U.S.

legislative proposals and other initiatives that, if adopted, could materially increase our worldwide corporate effective tax rate, increase global cash taxes, and negatively impact our 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;

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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