TE Connectivity reported a resilient Q3 2024, delivering solid top-line stability and meaningful margin expansion amid a slower macro environment. Revenue was $3.98 billion, essentially flat year over year on a reported basis and up 2% organically, while adjusted operating margin rose to 19.3% (up 200 basis points YoY) and adjusted EPS reached $1.91, beating guidance. The company generated $1.01 billion of cash from operations and $867 million of free cash flow in the quarter, contributing to a YTD free cash flow of about $2.0 billion. Orders totaled $4.11 billion, up 4% YoY and 3% sequentially, with a book-to-bill of 1.04, driven by AI design wins in the Communications segment. Management framed the quarter within a multi-year plan anchored on secular growth trends (renewables, AI, EV electrification and electronification) and a cash-generation model designed to return capital while pursuing bolt-on M&A.
Management emphasized the durability of TE’s earnings power through margin discipline and portfolio optimization, noting record year-to-date free cash flow and ongoing margin expansion across Transportation and Communications. A key near-term driver remains AI-related opportunities, supported by a broad base of hyperscale customers and semiconductor ecosystems. Management guided to roughly flat 2024 revenue with ~12% adjusted EPS growth for the full year, and projected continued margin expansion into 4Q2024. The company also signaled a deliberate capex plan (about 5% of revenue) to support growth initiatives, including AI programs, with a commitment to returning two-thirds of free cash flow to shareholders and pursuing bolt-on acquisitions (~$350 million in 2024 to-date).
Overall, TE’s risk-reward remains favorable given its diversified portfolio, strong cash generation, and a scalable AI opportunity set, albeit with macro-sensitive end markets (Industrial Equipment, Commercial Transportation) that warrant monitoring.