TE Connectivity plc

Fourth-quarter sales were $5.3 billion, up 13% organically year over year, and orders were $6.1 billion, up 29% versus the prior year. Adjusted EPS was $3.14, up 21%, and adjusted operating margins expanded 100 basis points year over year to 22.1% in the quarter. Full-year fiscal 2026 sales were nearly $20 billion, up 15% reported and 12% organically; adjusted EPS increased 24% to $11.52; and adjusted operating margins expanded 120 basis points to 22%. Free cash flow was $3.4 billion for the year, up $200 million, and cash from operations was approximately $4.5 billion. For fiscal Q1 2027, management guided to sales of $5.35 billion, up 15% year over year on both a reported and organic basis, and adjusted EPS of around $3.30, up 21%.

Terrence Curtin framed TE as a direct beneficiary of accelerating data and power trends, especially AI infrastructure, and said the company sits at the center of customers’ architecture trade-offs. He emphasized that DDN and Energy together made up about half of organic sales growth in fiscal 2026, while the other half came from broader industrial, automotive, aerospace, and defense demand. His tone was confident and expansionary, repeatedly pointing to strong backlog, design wins, and the view that DDN will be materially larger over the next four to five years.

Heath Mitts highlighted that Q4 sales included an $87 million reduction from IEEPA tariff refunds, with another $50 million expected in Q1 that is already in guidance. He said adjusted operating income was nearly $1.2 billion in Q4 with adjusted operating margins of 22.1%, while GAAP operating income was about $1.1 billion and included $12 million of acquisition-related charges, $14 million of restructuring and other charges, and $57 million of amortization expense. For the year, cash from operations was about $4.5 billion, free cash flow was $3.4 billion, and TE returned approximately $2.8 billion to shareholders while committing about $1.6 billion to bolt-on acquisitions; he also said restructuring charges were $110 million in fiscal 2026 and expects fiscal 2027 restructuring to be below $100 million. He noted a 21% adjusted tax rate in Q4 and Q1 and expects 22% for fiscal 2027, with a slight FX headwind next year.

Analysts focused heavily on DDN mix, especially the balance between copper and fiber/optical as architectures evolve toward 800V DC, liquid cooling, pluggable optics, and CPO. Management said power connectivity is architecture-agnostic and roughly 30% of DDN revenue, while copper still has a large role and the addressable market for copper is expected to more than double; optics is additive rather than displacing the opportunity, and RAM Photonics is still in engineering validation with selected customers. Questions also centered on backlog conversion and seasonality: management said backlog is about $8 billion, up roughly 30% year over year, with DDN and aerospace/defense making up about 60% of the backlog growth, and DDN revenue should build from Q4 to Q1 to Q2 before a larger second-half step-up. On margins, Heath Mitts said productivity remains strong but inflation in resins, metals, and freight is still elevated, so near-term margin expansion depends on balancing reinvestment with pricing and productivity.