TE Connectivity plc

TE Connectivity plc Annual Report - 2024 Performance Summary

Hey there! Let’s break down how TE Connectivity (NYSE: TEL) performed this past year—no jargon, just the key insights you need as an investor.

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1. What Does TE Do? (And Did They Grow?)

TE makes critical electrical connectors and sensors that operate in extreme environments (think deep-sea equipment, space tech, and electric vehicles). Their parts are essential for cars, medical devices, renewable energy systems, and factories.

2024 Highlights:

• Revenue: $16 billion (up 8.9% from 2023).
• Profit: $2.3 billion (up 5%).
• Growth Engine: Industrial Solutions (renewable energy, AI factories, data centers) surged 23.7%.
• Slower Segment: Transportation (cars/trucks) dipped 1% due to weaker sensor demand.

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2. Big Wins

• Industrial Dominance: 17% of industrial sales came from renewable energy projects (wind farms, power grids). Launched AI sensors for smarter factories.
• Patent Power: Holds over 10,000 patents, protecting innovations from rivals like Amphenol and Molex.
• Safety & Sustainability: Cut workplace injuries to a record low (0.06 incidents per 100 workers) and reduced water use by 15% in drought areas.
• Strong Cash Flow: $2 billion in cash (up 10%), with reliable dividends ($2.72/share paid this year).

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3. Challenges

• Transportation Struggles: Sensor sales lagged in traditional vehicles. Competitors are gaining ground in EV tech.
• Supply Chain Risks: 85% of products rely on metals like copper and gold—price swings could hurt margins.
• China Exposure: 25% of sales come from China (19 factories there). Trade tensions or tariffs pose a risk.
• Interest Rate Sensitivity: $3.5 billion debt includes variable-rate loans tied to benchmarks like SOFR. Rising rates could increase costs.

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4. Financial Health Check

• Cash: $2 billion (up 10%).
• Debt: $3.5 billion (down slightly, but watch variable rates).
• Dividends: 12th straight year of increases. New $0.71/share payout announced for December 2025.
• Stock Buybacks: Spent $1.39 billion repurchasing shares, signaling confidence in undervalued stock.

Verdict: Financially stable, but keep an eye on debt costs.

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5. Risks to Watch

• EV Competition: Rivals like Amphenol are racing to make cheaper connectors.
• Raw Material Volatility: Relies on a small group of suppliers for critical metals and plastics.
• Regulatory Hurdles: New EU/China sustainability rules could force costly manufacturing changes.
• Cybersecurity Threats: Industrial tech firms are prime targets for hackers.

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6. How They Stack Up Against Competitors

• Winning in Industrial Tech: 23.7% growth outpaces rivals’ single-digit gains.
• Lagging in Transportation: Needs to catch up in EV innovation.
• Margin Defense: Uses scale to avoid price wars hurting competitors.

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7. What’s Next? (2025 Outlook)

• Industrial Momentum: AI, data centers, and power grid upgrades should drive growth.
• Transportation Rebound? Potential stabilization if EV sensor demand rises.
• ESG Focus: Progress toward 2025 water/waste goals will impact investor sentiment.

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Should You Invest?

👍 Good Fit If You Want:

• Steady growth in automation/AI sectors.
• Reliable dividends (12-year streak of increases).
• A company with unique expertise in extreme-environment tech (medical, space, renewables).

👎 Think Twice If:

• You’re wary of China-linked risks or debt interest spikes.
• You prefer high-growth tech stocks over industrial stalwarts.

Bottom Line: TE isn’t flashy, but it’s a resilient player in critical infrastructure markets. Watch industrial segment performance and China sales in 2025!

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Questions? Drop us a note! 📈

Data sourced from TE Connectivity’s 2024 Annual Report and SEC filings.