TE Connectivity NYSE: TEL reported record fourth-quarter and full-year fiscal 2026 results, supported by demand for data and power connectivity products across artificial intelligence infrastructure, energy, industrial automation, transportation, aerospace and defense markets.
Chief Executive Officer Terrence Curtin said the company’s products are positioned at the intersection of major global technology and infrastructure investments. He cited AI infrastructure as a significant growth driver, while also pointing to automotive content growth, commercial transportation, grid modernization, factory automation and aerospace and defense demand.
For the fiscal fourth quarter, TE Connectivity recorded sales of $5.3 billion, up 13% organically from the prior year and above its guidance. Adjusted earnings per share rose 21% to $3.14, while adjusted operating margin expanded by 100 basis points year over year to 22.1%. The company generated $1.2 billion in free cash flow during the quarter and returned about $800 million to shareholders.
Full-Year Records and Fiscal 2027 Outlook
For fiscal 2026, TE Connectivity reported nearly $20 billion in sales, representing reported growth of 15% and organic growth of 12%. Orders exceeded $22 billion for the year, and the company entered fiscal 2027 with record backlog levels. Adjusted EPS increased 24% to $11.52, while adjusted operating margin improved 120 basis points to 22%.
Chief Financial Officer Heath Mitts said cash from operations totaled approximately $4.5 billion for the year and free cash flow reached $3.4 billion, up $200 million from fiscal 2025. The company converted 100% of adjusted net income into free cash flow while increasing capital expenditures to support growth in Industrial Solutions.
During fiscal 2026, TE Connectivity returned approximately $2.8 billion to shareholders through dividends and share repurchases and committed about $1.6 billion to bolt-on acquisitions within Industrial Solutions. Mitts said the pending acquisition of Astrodyne TDI is expected to close by the end of the company’s fiscal first quarter.
For the first quarter of fiscal 2027, TE Connectivity forecast sales of $5.35 billion, up 15% year over year on both a reported and organic basis. The company expects adjusted EPS of about $3.30, a 21% increase from the prior-year period. Curtin said TE expects full-year fiscal 2027 organic sales growth to be similar to the 12% rate achieved in fiscal 2026.
AI Infrastructure Drives Digital Data Networks Growth
Orders rose 29% year over year in the fourth quarter to $6.1 billion, producing a book-to-bill ratio of 1.14. Curtin said the company’s backlog was about $8 billion and up roughly 30% from the prior year. Digital Data Networks, or DDN, and aerospace and defense accounted for about 60% of the backlog growth, he said.
Industrial Solutions sales increased 20% organically in the fourth quarter, with DDN sales rising 17% sequentially. DDN orders grew roughly 70% during fiscal 2026, driven by demand from hyperscale customers, according to Curtin.
TE Connectivity expects to add more than $1 billion in DDN revenue in fiscal 2027, with the vast majority tied to AI applications. More than half of that growth is expected in the second half of the fiscal year as customer programs ramp.
Curtin said DDN has more than doubled over the past several years and is expected to grow by well over $1 billion annually over an extended period. He said future AI infrastructure will require both copper and fiber connectivity, while the company’s power-connectivity business is less dependent on architecture choices.
DDN revenue is approximately 30% power connectivity, Curtin said. He expects that business to grow faster than DDN overall as customers deploy technologies including 800-volt direct-current systems and liquid cooling. The company also highlighted optical opportunities, including its RAM Photonics technology for fiber attachment applications near or on chips.
Management said it is conducting engineering validation with customers for the RAM Photonics technology, while noting that not all customers are pursuing fiber-to-the-chip architectures in the near term.
Energy, Automation and Transportation Performance
Within Industrial Solutions, TE’s Energy business delivered 12% organic sales growth in the fourth quarter and 18% organic growth for the fiscal year. Curtin attributed the growth to grid-hardening investments, utility modernization and data-center construction.
Automation and Connected Living sales increased 18% organically in the fourth quarter, with growth in every region. Curtin cited factory automation and battery electric storage applications. Aerospace and defense sales rose 16% organically, reflecting continued demand in commercial aerospace and defense markets.
Transportation Solutions sales rose 7% organically in the fourth quarter. Automotive sales increased 6% organically despite lower vehicle production, which Curtin said reflected content growth, particularly in Asia, and improving trends in Europe. The company expects global vehicle production to decline slightly in fiscal 2027 but anticipates automotive growth above the market in a range of 4% to 6%.
Commercial Transportation sales increased 18% in the quarter across all regions, including improving conditions in North America. The Transportation Solutions segment posted adjusted operating margin of 21%, up 80 basis points from the prior year.
Curtin also discussed humanoid robots as a potential longer-term opportunity. He said TE’s portfolio could provide up to $500 of potential content per robot, including charging, power, high-speed data, motor and actuator connectivity. He cautioned that future unit volumes remain uncertain.
Margins, Costs and Other Financial Items
Mitts said fourth-quarter sales included $87 million in IEEPA tariff refunds that reduced reported sales. The company expects an additional $50 million reduction from tariff refunds in the fiscal first quarter, which is included in its outlook.
The company reported fourth-quarter GAAP operating income of approximately $1.1 billion. Results included $12 million of acquisition-related charges, $14 million of restructuring and other charges, and $57 million of amortization expense. TE Connectivity recorded $110 million in restructuring charges for fiscal 2026 and expects fiscal 2027 restructuring charges to remain below $100 million.
Management expects inflationary pressure to persist in areas including resins, metals and freight. Mitts said productivity measures are performing well and pricing can help offset inflation, though pricing is not expected to be a major tool. The company expects an adjusted tax rate of 21% in the fiscal first quarter and 22% for fiscal 2027.
About TE Connectivity (NYSE:TEL)
TE Connectivity Ltd. NYSE: TEL is a global technology and manufacturing company that designs and produces connectivity and sensor solutions. Its products help transmit power, data and signals across a range of applications, including vehicles, industrial equipment, communications networks, aerospace systems, medical devices and consumer electronics.
The company's product portfolio includes connectors, terminals, relays, sensors, antennas, circuit-protection products, wire and cable assemblies, and related application tooling.
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