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
●
T1Our net sales increased 13.8% and 16.5% in the third quarter and first nine months of fiscal 2026, respectively, as compared to the same periods of fiscal 2025 due to sales growth in both the Industrial Solutions and Transportation Solutions segments. On an organic basis, our net sales increased 12.2% and 11.4% in the third quarter and first nine months of fiscal 2026, respectively, as compared to the same periods of fiscal 2025.
●
Our net sales by segment were as follows:
●
Transportation Solutions—Our net sales increased 6.7% and 7.1% in the third quarter and first nine months of fiscal 2026, respectively, due primarily to sales increases in the automotive and commercial transportation end markets.
●
Industrial Solutions—Our net sales increased 21.9% and 28.3% in the third quarter and first nine months of fiscal 2026, respectively, primarily as a result of sales growth in the digital data networks, energy, automation and connected living, and aerospace, defense, and marine end markets.
●
In June 2026, our Board of Directors approved an interim cash dividend of $0.78 per ordinary share, payable on September 11, 2026, to shareholders of record on August 21, 2026.
●
Net cash provided by operating activities was $2,997 million in the first nine months of fiscal 2026.
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Outlook
In the fourth quarter of fiscal 2026, we expect our net sales to be approximately $5.25 billion, as compared to $4.75 billion in the fourth quarter of fiscal 2025. This increase is due to sales growth in both the Industrial Solutions and Transportation Solutions segments. In the fourth quarter of fiscal 2026, we expect diluted earnings per share from continuing operations to be approximately $2.84 per share. T2This outlook reflects the negative impact of foreign currency exchange rates on net sales of approximately $10 million in the fourth quarter of fiscal 2026 as compared to the same period of fiscal 2025. Also, this outlook is based on foreign currency exchange rates and commodity prices that are consistent with current levels. It does not include results related to our anticipated acquisition of Astrodyne TDI.
Acquisitions
T3On July 22, 2026, we entered into a definitive agreement to acquire Astrodyne TDI, a leading manufacturer of power and filter solutions, for approximately $1.4 billion in cash. The transaction, which is expected to close by the end of calendar year 2026, is subject to customary regulatory approvals and other closing conditions. The business will be reported as part of our Industrial Solutions segment.
During the first nine months of fiscal 2026, we acquired one business for a cash purchase price of $200 million, net of cash acquired. The acquisition includes certain earn-out provisions based on business performance for which we have estimated the acquisition-date fair value to be approximately $150 million. The acquired business has been reported as part of our Industrial Solutions segment from the date of acquisition.
Results of Operations
Net Sales
The following table presents our net sales and the percentage of total net sales by segment:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
2026
2025
($ in millions)
Transportation Solutions
$
2,580
50
%
$
2,418
53
%
$
7,469
51
%
$
6,975
56
%
Industrial Solutions
2,580
50
2,116
47
7,104
49
5,538
44
Total
$
5,160
100
%
$
4,534
100
%
$
14,573
100
%
$
12,513
100
%
The following table provides an analysis of the change in our net sales by segment:
Change in Net Sales for the Quarter Ended June 26, 2026
Change in Net Sales for the Nine Months Ended June 26, 2026
versus Net Sales for the Quarter Ended June 27, 2025
versus Net Sales for the Nine Months Ended June 27, 2025
Net Sales
Organic Net Sales
Net Sales
Organic Net Sales
Growth
Growth
Translation
Growth
Growth
Translation
Acquisitions
($ in millions)
Transportation Solutions
$
162
6.7
%
$
110
4.5
%
$
52
$
494
7.1
%
$
256
3.7
%
$
238
$
—
Industrial Solutions
464
21.9
444
21.0
20
1,566
28.3
1,172
21.2
122
272
Total
$
626
13.8
%
$
554
12.2
%
$
72
$
2,060
16.5
%
$
1,428
11.4
%
$
360
$
272
Net sales increased $626 million, or 13.8%, in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025 due to organic net sales growth of 12.2% and the positive impact of foreign currency translation of 1.6% due to the strengthening of certain foreign currencies. Net pricing actions positively affected organic net sales by $34 million in the third quarter of fiscal 2026.
In the first nine months of fiscal 2026, net sales increased $2,060 million, or 16.5%, as compared to the first nine months of fiscal 2025 due to organic net sales growth of 11.4%, the positive impact of foreign currency translation of 2.9% due to the strengthening of certain foreign currencies, and the positive impact of 2.2% from acquisitions. Richards
23
Table of Contents
Manufacturing Co. (“Richards Manufacturing”), which was acquired on April 1, 2025, contributed incremental net sales of $227 million in the first six months of fiscal 2026 over the same period in fiscal 2025. Net pricing actions positively affected organic net sales by $85 million in the first nine months of fiscal 2026.
See further discussion of net sales below under “Segment Results.”
Net Sales by Geographic Region. Our business operates in three geographic regions—Asia–Pacific, Europe/Middle East/Africa (“EMEA”), and the Americas—and our results of operations are influenced by changes in foreign currency exchange rates. Increases or decreases in the value of the U.S. dollar, compared to other currencies, will directly affect our reported results as we translate those currencies into U.S. dollars at the end of each fiscal period.
Approximately 60% of our net sales were invoiced in currencies other than the U.S. dollar in the first nine months of fiscal 2026.
The following table presents our net sales and the percentage of total net sales by geographic region(1):
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
2026
2025
($ in millions)
Asia–Pacific
$
1,951
38
%
$
1,660
37
%
$
5,708
39
%
$
4,805
38
%
EMEA
1,651
32
1,545
34
4,702
32
4,187
34
Americas
1,558
30
1,329
29
4,163
29
3,521
28
Total
$
5,160
100
%
$
4,534
100
%
$
14,573
100
%
$
12,513
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 June 26, 2026
Change in Net Sales for the Nine Months Ended June 26, 2026
versus Net Sales for the Quarter Ended June 27, 2025
versus Net Sales for the Nine Months Ended June 27, 2025
Net Sales
Organic Net Sales
Net Sales
Organic Net Sales
Growth
Growth
Translation
Growth
Growth
Translation
Acquisitions
($ in millions)
Asia–Pacific
$
291
17.5
%
$
254
15.3
%
$
37
$
903
18.8
%
$
813
16.9
%
$
90
$
—
EMEA
106
6.9
79
5.2
27
515
12.3
269
6.4
246
—
Americas
229
17.2
221
16.5
8
642
18.2
346
9.8
24
272
Total
$
626
13.8
%
$
554
12.2
%
$
72
$
2,060
16.5
%
$
1,428
11.4
%
$
360
$
272
Cost of Sales and Gross Margin
The following table presents cost of sales and gross margin information:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
Change
2026
2025
Change
($ in millions)
Cost of sales
$
3,325
$
2,934
$
391
$
9,254
$
8,094
$
1,160
As a percentage of net sales
64.4
%
64.7
%
63.5
%
64.7
%
Gross margin
$
1,835
$
1,600
$
235
$
5,319
$
4,419
$
900
As a percentage of net sales
35.6
%
35.3
%
36.5
%
35.3
%
24
Table of Contents
T4Gross margin increased $235 million and $900 million in the third quarter and first nine months of fiscal 2026, respectively, as compared to the same periods 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
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
Measure
2026
2025
2026
2025
Copper
Lb.
$
5.00
$
4.32
$
4.70
$
4.21
Gold
Troy oz.
3,682
2,715
3,428
2,498
Silver
Troy oz.
50.46
29.80
45.59
28.43
Palladium
Troy oz.
1,311
1,019
1,253
1,073
We expect to purchase approximately 195 million pounds of copper, 105,000 troy ounces of gold, 1.8 million troy ounces of silver, and 15,000 troy ounces of palladium in fiscal 2026.
Operating Expenses
The following table presents operating expense information:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
Change
2026
2025
Change
($ in millions)
Selling, general, and administrative expenses
$
532
$
491
$
41
$
1,606
$
1,372
$
234
As a percentage of net sales
10.3
%
10.8
%
11.0
%
11.0
%
Restructuring and other charges, net
$
83
$
14
$
69
$
103
$
109
$
(6)
Selling, General, and Administrative Expenses. Selling, general, and administrative expenses increased $41 million and $234 million in the third quarter and first nine months of fiscal 2026, respectively, as compared to the same periods of fiscal 2025. The increase in the third quarter of fiscal 2026 resulted primarily from increased selling expenses to support higher sales levels. The increase in the first nine months of fiscal 2026 was due primarily to increased selling expenses to support higher sales levels, the negative impact of foreign currency translation, higher incentive compensation costs, and the release of reserves associated with trade compliance matters in fiscal 2025.
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 $96 million during the first nine months of fiscal 2026, of which $86 million related to our fiscal 2026 program. Annualized cost savings related to the fiscal 2026 actions commenced during the first nine months of fiscal 2026 are expected to be approximately $58 million and are expected to be fully realized by the end of fiscal 2029. Cost savings will be reflected primarily in cost of sales and selling, general, and administrative expenses. T5For 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 $110 million.
See Note 2 to the Condensed Consolidated Financial Statements for additional information regarding net restructuring and other charges.
25
Table of Contents
Operating Income
The following table presents operating income and operating margin information:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
Change
2026
2025
Change
($ in millions)
Operating income
$
981
$
857
$
124
$
2,898
$
2,295
$
603
Operating margin
19.0
%
18.9
%
19.9
%
18.3
%
Operating income included the following:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
2026
2025
(in millions)
Acquisition-related charges:
Acquisition and integration costs
$
9
$
27
$
20
$
41
Charges associated with the amortization of acquisition-related fair value adjustments
—
3
3
6
9
30
23
47
Restructuring and other charges, net
83
14
103
109
Amortization expense
56
52
170
132
Total
$
148
$
96
$
296
$
288
See discussion of operating income below under “Segment Results.”
Non-Operating Items
The following table presents select non-operating information:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
Change
2026
2025
Change
($ in millions)
Interest expense
$
31
$
28
$
3
$
93
$
48
$
45
Income tax expense
223
208
15
520
1,128
(608)
Effective tax rate
23.0
%
24.6
%
18.1
%
48.9
%
Interest Expense. Interest expense increased $45 million in the first nine months of fiscal 2026 as compared to the first nine months of fiscal 2025 due primarily to higher average debt levels and cost of debt.
Income Taxes. See Note 12 to the Condensed Consolidated Financial Statements for discussion of income taxes.
26
Table of Contents
Segment Results
Effective at the beginning of the third quarter of fiscal 2026, we realigned a product line within the Transportation Solutions segment. Prior period results have been recast to conform to the current reporting structure. See Note 16 to the Condensed Consolidated Financial Statements for additional information regarding the realignment.
Transportation Solutions
Net Sales. The following table presents the Transportation Solutions segment’s net sales and the percentage of total net sales by industry end market:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
2026
2025
($ in millions)
Automotive
$
1,913
74
%
$
1,819
75
%
$
5,590
75
%
$
5,300
76
%
Commercial transportation
434
17
363
15
1,207
16
1,008
14
Sensors
233
9
236
10
672
9
667
10
Total
$
2,580
100
%
$
2,418
100
%
$
7,469
100
%
$
6,975
100
%
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 26, 2026
Change in Net Sales for the Nine Months Ended June 26, 2026
versus Net Sales for the Quarter Ended June 27, 2025
versus Net Sales for the Nine Months Ended June 27, 2025
Net Sales
Organic Net Sales
Net Sales
Organic Net Sales
Growth (Decline)
Growth (Decline)
Translation
Growth
Growth (Decline)
Translation
($ in millions)
Automotive
$
94
5.2
%
$
53
2.9
%
$
41
$
290
5.5
%
$
105
2.0
%
$
185
Commercial transportation
71
19.6
63
17.8
8
199
19.7
169
16.9
30
Sensors
(3)
(1.3)
(6)
(2.8)
3
5
0.7
(18)
(2.7)
23
Total
$
162
6.7
%
$
110
4.5
%
$
52
$
494
7.1
%
$
256
3.7
%
$
238
Net sales in the Transportation Solutions segment increased $162 million, or 6.7%, in the third quarter of fiscal 2026 from the third quarter of fiscal 2025 due to organic net sales growth of 4.5% and the positive impact of foreign currency translation of 2.2%. Net price erosion negatively affected organic net sales by $12 million in the third quarter of fiscal 2026. Our organic net sales by industry end market were as follows:
●
Automotive—Our organic net sales increased 2.9% in the third quarter of fiscal 2026 as a result of growth of 5.6% in the Asia–Pacific region and 2.6% in the EMEA region, partially offset by declines of 3.8% in the Americas region. Overall, our organic net sales growth resulted primarily from increased content per vehicle, partially offset by declines in global vehicle production.
●
Commercial transportation—Our organic net sales increased 17.8% in the third quarter of fiscal 2026 due to growth across all regions.
●
Sensors—Our organic net sales decreased 2.8% in the third quarter of fiscal 2026 resulting from declines in transportation applications, partially offset by growth in industrial applications.
In the first nine months of fiscal 2026, net sales in the Transportation Solutions segment increased $494 million, or 7.1%, from the first nine months of fiscal 2025 due to organic net sales growth of 3.7% and the positive impact of foreign
27
Table of Contents
currency translation of 3.4%. Net price erosion negatively affected organic net sales by $46 million in the first nine months of fiscal 2026. Our organic net sales by industry end market were as follows:
●
Automotive—Our organic net sales increased 2.0% in the first nine months of fiscal 2026 as a result of growth of 3.5% in the Asia–Pacific region and 2.8% in the EMEA region, partially offset by declines of 4.2% in the Americas region. Overall, our organic net sales growth was due primarily to increased content per vehicle.
●
Commercial transportation—Our organic net sales increased 16.9% in the first nine months of fiscal 2026 as a result of growth across all regions.
●
Sensors—Our organic net sales decreased 2.7% in the first nine months of fiscal 2026 due to declines in transportation applications, partially offset by growth in industrial applications.
Operating Income. The following table presents the Transportation Solutions segment’s operating income and operating margin information:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
Change
2026
2025
Change
($ in millions)
Operating income
$
444
$
462
$
(18)
$
1,448
$
1,353
$
95
Operating margin
17.2
%
19.1
%
19.4
%
19.4
%
Operating income in the Transportation Solutions segment decreased $18 million in the third quarter of fiscal 2026 and increased $95 million in the first nine months of fiscal 2026 as compared to the same periods of fiscal 2025. Excluding the items below, operating income increased in the third quarter of fiscal 2026 due primarily to improved manufacturing productivity. Excluding the items below, operating income increased in the first nine months of fiscal 2026 primarily as a result of improved manufacturing productivity, partially offset by price erosion.
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
2026
2025
(in millions)
Acquisition and integration costs
$
1
$
—
$
1
$
—
Restructuring and other charges, net
79
7
84
72
Amortization expense
17
17
53
51
Total
$
97
$
24
$
138
$
123
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
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
2026
2025
($ in millions)
Digital data networks
$
813
32
%
$
606
29
%
$
2,234
32
%
$
1,501
27
%
Automation and connected living
664
26
571
27
1,792
25
1,562
28
Aerospace, defense, and marine
419
16
374
18
1,208
17
1,082
20
Energy
516
20
384
18
1,367
19
879
16
Medical
168
6
181
8
503
7
514
9
Total
$
2,580
100
%
$
2,116
100
%
$
7,104
100
%
$
5,538
100
%
28
Table of Contents
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 26, 2026
Change in Net Sales for the Nine Months Ended June 26, 2026
versus Net Sales for the Quarter Ended June 27, 2025
versus Net Sales for the Nine Months Ended June 27, 2025
Net Sales
Organic Net Sales
Net Sales
Organic Net Sales
Growth (Decline)
Growth (Decline)
Translation
Growth (Decline)
Growth (Decline)
Translation
Acquisitions
($ in millions)
Digital data networks
$
207
34.2
%
$
205
34.0
%
$
2
$
733
48.8
%
$
715
47.7
%
$
18
$
—
Automation and connected living
93
16.3
83
14.3
10
230
14.7
180
11.5
49
1
Aerospace, defense, and marine
45
12.0
43
11.5
2
126
11.6
100
9.2
26
—
Energy
132
34.4
126
32.7
6
488
55.5
189
21.5
28
271
Medical
(13)
(7.2)
(13)
(7.2)
—
(11)
(2.1)
(12)
(2.3)
1
—
Total
$
464
21.9
%
$
444
21.0
%
$
20
$
1,566
28.3
%
$
1,172
21.2
%
$
122
$
272
In the Industrial Solutions segment, net sales increased $464 million, or 21.9%, in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025 due primarily to organic net sales growth of 21.0%. Net pricing actions positively affected organic net sales by $46 million in the third quarter of fiscal 2026. Our organic net sales by industry end market were as follows:
●
T6Digital data networks—Our organic net sales increased 34.0% in the third quarter of fiscal 2026 due primarily to growth in artificial intelligence applications.
●
Automation and connected living—Our organic net sales increased 14.3% in the third quarter of fiscal 2026 due primarily to growth in factory automation applications.
●
Aerospace, defense, and marine—Our organic net sales increased 11.5% in the third quarter of fiscal 2026 primarily as a result of growth in the defense and commercial aerospace markets.
●
Energy—Our organic net sales increased 32.7% in the third quarter of fiscal 2026 with growth across all regions and strength in grid hardening and data center applications.
●
Medical—Our organic net sales decreased 7.2% in the third quarter of fiscal 2026 due primarily to reduced demand resulting from supply chain dynamics.
Net sales in the Industrial Solutions segment increased $1,566 million, or 28.3%, in the first nine months of fiscal 2026 as compared to the first nine months of fiscal 2025 due to organic net sales growth of 21.2%, the positive impact of 4.9% from acquisitions, and the positive impact of foreign currency translation of 2.2%. Richards Manufacturing, which was acquired on April 1, 2025, contributed incremental net sales of $227 million in the first six months of fiscal 2026 over the same period in fiscal 2025. Net pricing actions positively affected organic net sales by $131 million in the first nine months of fiscal 2026. Our organic net sales by industry end market were as follows:
●
Digital data networks—Our organic net sales increased 47.7% in the first nine months of fiscal 2026 primarily as a result of growth in artificial intelligence applications.
●
Automation and connected living—Our organic net sales increased 11.5% in the first nine months of fiscal 2026 primarily as a result of growth in factory automation applications.
●
Aerospace, defense, and marine—Our organic net sales increased 9.2% in the first nine months of fiscal 2026 due primarily to growth in the defense and commercial aerospace markets.
●
Energy—Our organic net sales increased 21.5% in the first nine months of fiscal 2026 with growth in all regions and strength in grid hardening and data center applications.
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Table of Contents
●
Medical—Our organic net sales decreased 2.3% in the first nine months of fiscal 2026 primarily as a result of our strategic exit of a product line.
Operating Income. The following table presents the Industrial Solutions segment’s operating income and operating margin information:
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
Change
2026
2025
Change
($ in millions)
Operating income
$
537
$
395
$
142
$
1,450
$
942
$
508
Operating margin
20.8
%
18.7
%
20.4
%
17.0
%
Operating income in the Industrial Solutions segment increased $142 million and $508 million in the third quarter and first nine months of fiscal 2026, respectively, as compared to the same periods of fiscal 2025. Excluding the items below, operating income increased in the third quarter and first nine months of fiscal 2026 primarily as a result of higher volume.
For the
For the
Quarters Ended
Nine Months Ended
June 26,
June 27,
June 26,
June 27,
2026
2025
2026
2025
(in millions)
Acquisition-related charges:
Acquisition and integration costs
$
8
$
27
$
19
$
41
Charges associated with the amortization of acquisition-related fair value adjustments
—
3
3
6
8
30
22
47
Restructuring and other charges, net
4
7
19
37
Amortization expense
39
35
117
81
Total
$
51
$
72
$
158
$
165
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. We may use excess cash 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.
We may also use excess cash and other funding to make strategic acquisitions. We intend to fund the anticipated acquisition of Astrodyne TDI with a combination of available cash and the issuance of commercial paper and, if necessary, borrowing under our existing credit facility and/or new debt financing. 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 nine months of fiscal 2026, net cash provided by operating activities increased $279 million to $2,997 million from $2,718 million in the first nine months of fiscal 2025. The increase resulted primarily from higher pre-tax income, partially offset by the impact of changes in working capital levels and an increase in income tax payments. The amount of income taxes paid, net of refunds, during the first nine months of fiscal 2026 and 2025 was $353 million and $184 million, respectively.
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Cash Flows from Investing Activities
Capital expenditures were $832 million and $665 million in the first nine months 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 2026, we acquired one business for a cash purchase price of $200 million, net of cash acquired. We acquired Richards Manufacturing for approximately $2.3 billion, net of cash acquired, during the first nine months of fiscal 2025. 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. See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding acquisitions.
Cash Flows from Financing Activities and Capitalization
Total debt at June 26, 2026 and September 26, 2025 was $5,632 million and $5,694 million, respectively. See Note 7 to the Condensed Consolidated Financial Statements for additional information regarding debt.
During the first nine months of fiscal 2026, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, issued $200 million aggregate principal amount of 4.50% senior notes due in February 2031 and $550 million aggregate principal amount of 4.875% senior notes due in February 2036. The February 2031 senior notes represent a further issuance of TEGSA’s outstanding $450 million aggregate principal amount of 4.50% senior notes which were issued in fiscal 2025 and bring the total aggregate principal amount of the 4.50% senior notes due in February 2031 to $650 million. The new 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.
During the first nine months of fiscal 2026, TEGSA repaid, at maturity, $500 million of 4.50% senior notes and $350 million of 3.70% senior notes, both due in February 2026.
At June 26, 2026, TEGSA had $100 million of commercial paper outstanding at a weighted-average interest rate of 3.95%. TEGSA had no commercial paper outstanding at September 26, 2025.
TEGSA entered into a new five-year unsecured senior revolving credit facility (“Credit Facility”) in February 2026 with aggregate commitments of $3.0 billion, which refinanced and replaced in full TEGSA’s existing $1.5 billion five-year unsecured senior revolving credit facility (the “Replaced Credit Facility”). The Credit Facility matures in February 2031 and contains provisions that allow for incremental commitments of up to $1.0 billion, subject to terms and conditions in the Credit Facility. TEGSA had no borrowings under the Credit Facility at June 26, 2026 or the Replaced Credit Facility at September 26, 2025.
Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) with respect to borrowings in U.S. dollars, (a) the term secured overnight financing rate (“Term SOFR”) (as defined in the 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 ½ of 1%, (iii) the Term SOFR for a one-month interest period plus 1%, and (iv) 1%, (2) with respect to borrowings in euro, the Euro Interbank Offered Rate, (3) with respect to borrowings in sterling, the Sterling Overnight Index Average Reference Rate, and (4) with respect to borrowings in yen, the Tokyo Interbank Offered Rate, 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 5.0 to 12.5 basis points of the lenders’ commitments under the Credit Facility.
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
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June 26, 2026, 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 $643 million and $594 million in the first nine months of fiscal 2026 and 2025, respectively.
In June 2026, our Board of Directors approved an interim cash dividend of $0.78 per ordinary share, payable on September 11, 2026, to shareholders of record on August 21, 2026.
T7During the first nine months of fiscal 2026, our Board of Directors authorized an increase of $3.0 billion in our share repurchase program. Ordinary shares repurchased under the share repurchase program were as follows:
For the
Nine Months Ended
June 26,
June 27,
2026
2025
(in millions)
Number of ordinary shares repurchased
6
6
Repurchase value
$
1,350
$
916
At June 26, 2026, we had $3.0 billion 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 in earnings of our non-guarantor subsidiaries, for TE Connectivity plc, TE Connectivity Switzerland Ltd., and TEGSA on a combined basis.
June 26,
September 26,
2026
2025
(in millions)
Balance Sheet Data:
Total current assets
$
1,271
$
1,236
Total noncurrent assets(1)
4,558
2,465
Total current liabilities
610
1,348
Total noncurrent liabilities(2)
10,728
10,033
(1)
Includes $4,479 million and $2,444 million as of June 26, 2026 and September 26, 2025, respectively, of intercompany loans receivable from non-guarantor subsidiaries.
(2)
Includes $5,094 million and $5,001 million as of June 26, 2026 and September 26, 2025, respectively, of intercompany loans payable to non-guarantor subsidiaries.
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For the
For the
Nine Months Ended
Fiscal Year Ended
June 26,
September 26,
2026
2025
(in millions)
Statement of Operations Data:
Income (loss) from continuing operations
$
262
$
(197)
Net income (loss)
262
(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 June 26, 2026, we had outstanding letters of credit, letters of guarantee, and surety bonds of $277 million to support normal business activities.
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.
Trade Compliance Matters
As previously reported, as part of our ongoing internal compliance activities, we conducted an investigation related to country of origin for import matters. T8During the third quarter of fiscal 2026, we filed a perfected prior disclosure to the U.S. Customs and Border Protection Agency (“CBP”) regarding Section 301 unpaid duties, fees, and interest for certain imported products into the U.S. and paid $14 million to CBP to resolve this matter. Although CBP has not yet completed its review of the disclosure, we do not expect that the outcome of the review will have a material effect on our results of operations, financial position, or cash flows.
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
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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 nine months 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.
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.
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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, supply chain disruptions, 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 any resulting supply chain or other disruptions, and volatile and uncertain economic conditions and the evolving regulatory system in China;
●
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 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;
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●
the possible effects on us of various global 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.
Mentions · how they’re counted
| Category | Underlined | Word counter | Model’s count |
|---|---|---|---|
| AI AI, artificial intelligence, generative AI, machine learning, large language model, LLM | 4 | 4 | 4 |
| Layoffs layoffs, RIF, headcount reduction, workforce optimization, restructuring | 9 | — | 0 |
| Recession recession, downturn, contraction, slowdown | 1 | 1 | 1 |
| Tariffs tariff, trade war, trade barriers, trade restrictions, trade policy | 1 | 1 | 1 |
| Buybacks share repurchase, buyback program | 4 | — | 2 |
Underlines use the same word lists the scores use. AI, recession and tariffs follow Palanor’s word counter, so those counts match it exactly on the same text. Layoffs and buybacks use the terms the model was given. The model’s count is an estimate by meaning, not by string, so it can differ from the underlines.
Source: SEC EDGAR · public domain · Highlights by Palanor