TE Connectivity delivered solid QQ2 2025 results with 5% organic revenue growth and an adjusted operating margin of 19.4%, signaling continued operating leverage as the company integrates the Richards acquisition and navigates a mixed macro environment. Revenue of $4.143B and orders of $4.25B supported a book-to-bill of 1.02, underscoring healthy demand momentum, particularly in Industrial Solutions (17% organic growth) driven by AI/data networking programs and hyperscale data-center ramps. Management highlighted a global localization model, tariffs mitigation, and a strong balance sheet as key pillars supporting cash generation and capital deployment.
The company disclosed tariff exposure of roughly 3% ofsales in the third quarter, with about one-third mitigated through sourcing changes and the remainder expected to be recovered via pricing actions (approximately two percentage points). Management stressed that tariffs are not expected to meaningfully impact Q3 earnings, aided by 70% regional localization and customer mitigation efforts. The Richards acquisition closed in QQ2 2025, contributing roughly $70M in sales with neutral impact on adjusted EPS, illustrating TE’s active acquisition strategy to strengthen North American utilities exposure.
Looking ahead, TE reaffirmed guidance for Q3 2025: revenue around $4.3B, organic growth of roughly 5% YoY, and adjusted EPS near $2.06. AI/data center momentum remains a meaningful growth vector, with AI applications expected to reach above $700M in FY2025 and a Q2 orders surge (+150% YoY) highlighting customer demand. The company remains focused on margin discipline, with industrial margins expanding ~260 bps in QQ2 and continued free cash flow generation (FTC >100% of net income) and a 9% dividend increase to support shareholder value. Investors should monitor tariff developments, auto content fluctuations (offset by Asia-led growth), and integration progress of Richards as key drivers of the near-term trajectory.