Third Quarter 2023 Highlights:
- Sales of $3.199 billion, down 3% in U.S. dollars and 5%
organically compared to the third quarter of 2022
- GAAP Diluted EPS of $0.83, up 4% compared to prior year
- Adjusted Diluted EPS of $0.78, down 3% compared to prior
year
- GAAP and Adjusted Operating Margin of 20.6% and 20.8%,
respectively
- Operating and Free Cash Flow of $618 million and $544 million,
respectively
- Closed three acquisitions since July earnings call – Connor
Manufacturing Services, Q Microwave and XMA Corporation – and
signed an agreement to acquire PCTEL
- Increased quarterly dividend by 5% to $0.22 per share
Amphenol Corporation (NYSE: APH) today reported third quarter
2023 results.
“We are pleased to have closed the third quarter of 2023 with
sales and Adjusted Diluted EPS both exceeding the high end of our
guidance,” said Amphenol President and Chief Executive Officer, R.
Adam Norwitt. “Sales decreased from prior year by 3%, driven by
moderations in the mobile networks, mobile devices, IT datacom,
broadband and industrial markets, which were partially offset by
growth in the commercial air, military and automotive markets as
well as contributions from the Company’s acquisition program.
Despite the reduction in our sales from prior year, our team
executed strongly in the quarter, with Adjusted Operating Margin
reaching 20.8%.”
“During the third quarter of 2023, Amphenol continued to deploy
its financial strength in a variety of ways to increase shareholder
value. This included the repurchase of 1.7 million shares of its
common stock for $149 million as well as the payment of dividends
of $125 million, resulting in total capital returned to
shareholders of nearly $275 million.”
“We remain focused on expanding our growth opportunities through
a deep commitment to developing enabling technologies for customers
across our served markets, an ongoing strategy of market and
geographic diversification as well as an active and successful
acquisition program. To that end, we are excited to have closed on
three acquisitions since our July earnings call: Connor
Manufacturing Services, Q Microwave and XMA Corporation. Based in
Illinois, Connor is a global manufacturer of power interconnect
products including high voltage busbars for the automotive and
industrial markets with annual sales of approximately $100 million.
Based in California, Q Microwave is a designer and manufacturer of
mission-critical radio frequency components utilized in military
platforms with annual sales of approximately $20 million. Based in
New Hampshire, XMA is also a provider of radio frequency components
for the military and IT datacom markets with annual sales of
approximately $15 million. Connor will be included in our
Interconnect and Sensor Systems Segment, while Q Microwave and XMA
will be included in our Harsh Environment Solutions Segment. All of
these acquisitions further expand our offering of high-technology
interconnect products across a variety of our markets, while adding
talented management teams to the Amphenol family.”
“We are also pleased that on October 13, 2023, we entered into a
definitive agreement to acquire PCTEL, Inc. (Nasdaq: PCTI). PCTEL
is a leading global provider of antennas, as well as purpose-built
Industrial IoT products and test and measurement solutions. The
transaction is expected to close by early 2024, subject to approval
from PCTEL’s shareholders and other customary closing conditions.
We are excited by the opportunities PCTEL brings to further expand
the breadth of our already strong antenna offering.”
Increase in Quarterly Dividend
On October 24, 2023, the Company’s Board of Directors approved a
5% increase in the Company’s quarterly dividend, from $0.21 per
share to $0.22 per share. The new dividend amount will be paid on
January 10, 2024 to shareholders of record as of December 19,
2023.
Fourth Quarter and Full Year 2023 Outlook
Assuming market conditions do not meaningfully worsen as well as
constant exchange rates, for the fourth quarter of 2023, Amphenol
expects sales to be in the range of $3.090 billion to $3.150
billion. This represents a 3% to 5% decline over the prior year
quarter. Adjusted Diluted EPS is expected to be in the range of
$0.75 to $0.77, representing a 1% to 4% reduction from the fourth
quarter of 2022. For the full year 2023, Amphenol expects sales to
be in the range of $12.317 billion to $12.377 billion, representing
a 2% decline over the prior year, while Adjusted Diluted EPS is
expected to be in the range of $2.94 to $2.96, representing a 1% to
2% decline over the prior year. This guidance does not include the
impact of the PCTEL acquisition, which has not yet closed.
“Despite the ongoing challenges and uncertainties around the
world, we are very pleased with the Company’s third quarter 2023
results,” Mr. Norwitt continued. “The revolution in electronics
continues to accelerate, creating exciting long-term growth
opportunities for Amphenol across each of our diversified end
markets. Our ongoing drive to leverage our competitive advantages
and create sustained financial strength, as well as our initiatives
to expand our product offerings, both organically and through our
acquisition program, have created an excellent base for the
Company’s future performance. I am confident in the ability of our
outstanding entrepreneurial management team to continue to
dynamically adjust to changing market conditions, to capitalize on
the wide array of growth opportunities that arise in all market
cycles and to continue to generate sustainable long-term value for
our shareholders and other stakeholders. Most importantly, I remain
truly grateful to our team for their extraordinary efforts in
navigating the many challenges around the world while continuing to
strongly support our customers and drive outstanding operating
performance.”
Conference Call and Webcast Details
The Company will host a conference call to discuss its third
quarter results at 1:00 PM (EDT) on Wednesday, October 25, 2023.
The toll-free dial-in number is 888-455-0949; International dial-in
number is +1-773-799-3973; Passcode: LAMPO. A replay of the call
will be available until 11:59 PM (EST) on Saturday, November 25,
2023. The replay numbers are toll free 800-813-5529; International
toll number +1-203-369-3826; Passcode: 7183.
A live broadcast as well as a replay of the call can be accessed
through the Investor Relations section of the company’s website at
https://investors.amphenol.com.
About Amphenol
Amphenol Corporation is one of the world’s largest designers,
manufacturers and marketers of electrical, electronic and fiber
optic connectors and interconnect systems, antennas, sensors and
sensor-based products and coaxial and high-speed specialty cable.
Amphenol designs, manufactures and assembles its products at
facilities in approximately 40 countries around the world and sells
its products through its own global sales force, independent
representatives and a global network of electronics distributors.
Amphenol has a diversified presence as a leader in high-growth
areas of the interconnect market including: Automotive, Broadband
Communications, Commercial Aerospace, Industrial, Information
Technology and Data Communications, Military, Mobile Devices and
Mobile Networks. For more information, visit www.amphenol.com.
Non-GAAP Financial Measures
The financial statements included within this press release are
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP” or “U.S. GAAP”).
This press release also contains certain non-GAAP financial
measures, including Adjusted Operating Income, Adjusted Operating
Margin, Adjusted Net Income attributable to Amphenol Corporation,
Adjusted Effective Tax Rate, Adjusted Diluted EPS, Organic Net
Sales Growth, and Free Cash Flow (collectively, “non-GAAP financial
measures”), which are intended to supplement the reported GAAP
results. Management utilizes these non-GAAP financial measures as
part of its internal reviews for purposes of monitoring, evaluating
and forecasting the Company’s financial performance, communicating
operating results to the Company’s Board of Directors and assessing
related employee compensation measures. Management believes that
such non-GAAP financial measures may be helpful to investors in
assessing the Company’s overall financial performance, trends and
period-over-period comparative results. Non-GAAP financial measures
related to operating income, operating margin, net income
attributable to Amphenol Corporation, effective tax rate and
diluted EPS exclude income and expenses that are not directly
related to the Company’s operating performance during the periods
presented. Items excluded in the presentation of these non-GAAP
financial measures in any period may consist of, without
limitation, acquisition-related expenses, refinancing-related
costs, gains associated with bargain purchase acquisitions, and
certain discrete tax items including, but not limited to, (i) the
excess tax benefits related to stock-based compensation and (ii)
the impact of significant changes in tax law. Non-GAAP financial
measures related to net sales exclude the impact related to foreign
currency exchange and acquisitions. Reconciliations of non-GAAP
financial measures to the most directly comparable GAAP financial
measures are included at the end of this press release. However,
such non-GAAP financial measures are included for supplemental
purposes only and should not be considered in isolation or as a
substitute for or superior to the related U.S. GAAP financial
measures. In addition, these non-GAAP financial measures are not
necessarily the same or comparable to similar measures presented by
other companies as such measures may be calculated differently or
may exclude different items. The non-GAAP financial measures are
defined within the “Supplemental Financial Information” table at
the end of this press release and should be read in conjunction
with the Company’s financial statements presented in accordance
with U.S. GAAP.
Forward-Looking Statements
This press release may include forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
and the provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements are based on our
management’s assumptions and beliefs about future events or
circumstances using information currently available, and as a
result, they are subject to risks and uncertainties.
Forward-looking statements address events or developments that
Amphenol Corporation expects or believes may or will occur in the
future. These forward-looking statements, which address the
Company’s expected business and financial performance and financial
condition, among other matters, may contain words and terms such
as: “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “forecast,” “guidance,” “intend,” “look ahead,” “may,”
“ongoing,” “optimistic,” “plan,” “potential,” “predict,” “project,”
“seek,” “should,” “target,” “will” or “would” and other words and
terms of similar meaning. Forward-looking statements by their
nature address matters that are, to different degrees, uncertain,
such as statements about expected earnings, revenues, growth,
liquidity, effective tax rate, interest rates or other matters.
Although the Company believes the expectations reflected in all
forward-looking statements, including those we may make regarding
fourth quarter and full year 2023 sales and Adjusted Diluted EPS as
well as the expected timing for closing certain acquisitions, among
other matters, are based upon reasonable assumptions, the
expectations may not be attained or there may be material
deviation. Readers and investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date on which they are made.
There are risks and uncertainties that could cause actual
results to differ materially from these forward-looking statements,
which include, but are not limited to, the following: political,
economic, military and other risks related to operating in
countries outside the United States, as well as changes in general
economic conditions, geopolitical conditions, U.S. trade policies
(including, but not limited to, sanctions) and other factors beyond
the Company’s control; uncertainties associated with an economic
slowdown or recession in any of the Company’s end markets that
could negatively affect the financial condition of our customers
and could result in reduced demand; risks and impacts associated
with adverse public health developments, including epidemics and
pandemics, such as the COVID-19 pandemic, which disrupted our
operations from 2020 through early 2023 and could disrupt them
again in the future; risks associated with our inability to obtain
certain raw materials and components; cybersecurity threats and
techniques used to disrupt operations and gain unauthorized access
to our information technology systems, including, but not limited
to, malware, phishing, credential harvesting, ransomware and other
increasingly sophisticated attacks, that continue to expand and
evolve globally, which could, among other things, impair our
information technology systems and disrupt business operations,
result in reputational damage, loss of our intellectual property,
the loss of or inability to access confidential information and
critical business, financial or other data, and/or cause the
release of highly sensitive confidential information, and
potentially lead to litigation and/or governmental investigations
and fines, among other risks; negative impacts caused by extreme
weather conditions and natural catastrophic events, including those
caused or intensified by climate change and global warming; risks
associated with the improper conduct by any of our employees,
customers, suppliers, distributors or any other business partners
which could impair our business reputation and financial results
and could result in our non-compliance with anti-corruption laws
and regulations of the U.S. government and various foreign
jurisdictions; changes in exchange rates of the various currencies
in which the Company conducts business; the risks associated with
the Company’s dependence on attracting, recruiting, hiring and
retaining skilled employees, including as part of our various
management teams; risks associated with the increasing scrutiny and
expectations regarding environmental, social and corporate
governance matters that could result in additional costs or risks
or otherwise adversely impact our business; risks and difficulties
in trying to compete successfully on the basis of technology
innovation, product quality and performance, price, customer
service and delivery time; the Company’s dependence on end market
dynamics to sell its products, particularly in the communications,
automotive and military end markets, pricing pressures resulting
from large customers that regularly exert pressure on their
suppliers, including the Company, and changes in defense
expenditures of the U.S. and non-U.S. governments, which are
subject to political and budgetary fluctuations and constraints,
all of which could adversely affect our operating results;
difficulties and unanticipated expenses in connection with
purchasing and integrating newly acquired businesses, including the
potential for the impairment of goodwill and other intangible
assets; events beyond the Company’s control that could lead to an
inability to meet its financial and other covenants and
requirements, which could result in a default under the Company’s
revolving credit facility, unsecured term loan credit facility or
any of our various senior notes; risks associated with the
Company’s inability to access the global capital markets on
favorable terms, including as a result of significant deterioration
of general economic or capital market conditions, or as a result of
a downgrade in the Company’s credit rating; changes in interest
rates; government contracting risks that the Company may be subject
to, including laws and regulations governing reporting obligations,
performance of government contracts and related risks associated
with conducting business with the U.S. and other foreign
governments or their suppliers (both directly and indirectly);
governmental export and import controls as well as sanctions and
trade embargoes that certain of our products may be subject to,
including export licensing, customs regulations, economic sanctions
and other laws; changes in fiscal and tax policies, audits and
examinations by taxing authorities, laws, regulations and guidance
in the United States and foreign jurisdictions; any difficulties in
enforcing and protecting the Company’s intellectual property
rights; litigation, customer claims, voluntary or forced product
recalls, governmental investigations, criminal liability or
environmental matters including changes to laws and regulations to
which the Company may be subject; and incremental costs, risks and
regulations associated with efforts to combat the negative effects
of climate change.
A further description of these uncertainties and other risks can
be found in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2022, Quarterly Reports on Form 10-Q and the
Company’s other reports filed with the Securities and Exchange
Commission. These or other uncertainties not identified in these
documents (that we either currently do not expect to have an
adverse effect on our business or that we are unable to predict or
identify at this time) may cause the Company’s actual future
results to be materially different from those expressed in any
forward-looking statements. The Company undertakes no obligation to
update or revise any forward-looking statements except as required
by law.
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(dollars and shares in
millions, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net sales
$
3,199.2
$
3,295.2
$
9,227.2
$
9,383.8
Cost of sales
2,150.7
2,235.2
6,243.5
6,393.1
Gross profit
1,048.5
1,060.0
2,983.7
2,990.7
Acquisition-related expenses
9.0
12.0
18.4
12.0
Selling, general and administrative
expenses
381.6
366.9
1,095.7
1,059.0
Operating income
657.9
681.1
1,869.6
1,919.7
Interest expense
(33.6)
(32.8)
(104.5)
(91.3)
Gain on bargain purchase acquisition
(1)
—
—
5.4
—
Other income (expense), net
9.2
2.6
18.9
6.6
Income before income taxes
633.5
650.9
1,789.4
1,835.0
Provision for income taxes (2)
(115.2)
(150.4)
(363.0)
(429.2)
Net income
518.3
500.5
1,426.4
1,405.8
Less: Net income attributable to
noncontrolling interests
(4.4)
(3.9)
(12.8)
(11.0)
Net income attributable to Amphenol
Corporation
$
513.9
$
496.6
$
1,413.6
$
1,394.8
Net income attributable to Amphenol
Corporation per common share — Basic
$
0.86
$
0.83
$
2.37
$
2.34
Weighted average common shares outstanding
— Basic
597.7
595.3
595.9
596.6
Net income attributable to Amphenol
Corporation per common share — Diluted (3)
$
0.83
$
0.80
$
2.28
$
2.24
Weighted average common shares outstanding
— Diluted
622.0
619.3
620.1
621.5
Note 1 Reflects the non-cash gain of $5.4 million
($0.01 per share) associated with a bargain purchase acquisition
closed during the second quarter of 2023.
Note
2 Provision for income taxes for the three months ended
September 30, 2023 and 2022 includes excess tax benefits related to
stock-based compensation of $38.3 million ($0.06 per share) and
$10.6 million ($0.02 per share), respectively. Provision for income
taxes for the nine months ended September 30, 2023 and 2022
includes excess tax benefits related to stock-based compensation of
$67.3 million ($0.11 per share) and $21.9 million ($0.04 per
share), respectively.
Note 3 Net income per share for
the three months ended September 30, 2023 and 2022 includes the
excess tax benefits related to stock-based compensation discussed
in Note 2. Net income per share for the three months ended
September 30, 2023 also includes acquisition-related expenses of
$9.0 million ($8.4 million after-tax, or $0.01 per share),
comprised of external transaction costs related to acquisitions.
Net income per share for the three months ended September 30, 2022
also includes acquisition-related expenses of $12.0 million ($10.5
million after-tax, or $0.02 per share), comprised of external
transaction costs as well as the amortization related to the value
associated with acquired backlog resulting from an acquisition that
closed in 2022. Net income per share for the nine months
ended September 30, 2023 and 2022 includes the excess tax benefits
related to stock-based compensation discussed in Note 2. Net income
per share for the nine months ended September 30, 2023 also
includes the non-cash gain related to the bargain purchase
acquisition discussed in Note 1, as well as acquisition-related
expenses of $18.4 million ($16.2 million after-tax, or $0.03 per
share), comprised of external transaction costs incurred in the
second and third quarters of 2023, as well as the amortization
related to the value associated with acquired backlog resulting
from an acquisition that closed in the first quarter of 2023. Net
income per share for the nine months ended September 30, 2022 also
included the acquisition-related expenses in the third quarter of
2022 discussed above. Excluding these effects and the impact
of rounding, Adjusted Diluted EPS, a non-GAAP financial measure
which is defined and reconciled to its most comparable GAAP
financial measure in this press release, was $0.78 and $0.80 for
the three months ended September 30, 2023 and 2022, respectively,
and $2.19 and $2.23 for the nine months ended September 30, 2023
and 2022, respectively.
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(dollars in millions)
September 30,
December 31,
2023
2022
ASSETS
Current Assets:
Cash and cash equivalents
$
1,481.5
$
1,373.1
Short-term investments
252.5
61.1
Total cash, cash equivalents and
short-term investments
1,734.0
1,434.2
Accounts receivable, less allowance for
doubtful accounts of $70.1 and $63.9, respectively
2,571.2
2,631.3
Inventories
2,099.1
2,093.6
Prepaid expenses and other current
assets
369.0
320.0
Total current assets
6,773.3
6,479.1
Property, plant and equipment, less
accumulated depreciation of $2,162.1 and $2,019.3, respectively
1,246.6
1,204.3
Goodwill
6,574.5
6,446.1
Other intangible assets, net
744.2
734.1
Other long-term assets
420.4
462.6
Total Assets
$
15,759.0
$
15,326.2
LIABILITIES, REDEEMABLE NONCONTROLLING
INTEREST AND EQUITY
Current Liabilities:
Accounts payable
$
1,248.9
$
1,309.1
Accrued salaries, wages and employee
benefits
360.9
416.7
Accrued income taxes
113.6
169.5
Accrued dividends
125.6
124.9
Other accrued expenses
704.2
653.2
Current portion of long-term debt
355.6
2.7
Total current liabilities
2,908.8
2,676.1
Long-term debt, less current portion
3,936.4
4,575.0
Accrued pension and postretirement benefit
obligations
129.1
127.9
Deferred income taxes
413.0
409.8
Other long-term liabilities
433.4
443.3
Total Liabilities
7,820.7
8,232.1
Redeemable noncontrolling interest
21.8
20.6
Equity:
Common stock
0.6
0.6
Additional paid-in capital
3,015.0
2,650.4
Retained earnings
5,669.7
4,979.4
Treasury stock, at cost
(170.6)
(79.8)
Accumulated other comprehensive loss
(657.9)
(535.0)
Total stockholders’ equity attributable to
Amphenol Corporation
7,856.8
7,015.6
Noncontrolling interests
59.7
57.9
Total Equity
7,916.5
7,073.5
Total Liabilities, Redeemable
Noncontrolling Interest and Equity
$
15,759.0
$
15,326.2
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW
(Unaudited)
(dollars in millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Cash from operating
activities:
Net income
$
518.3
$
500.5
$
1,426.4
$
1,405.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
101.0
102.7
291.4
284.6
Stock-based compensation expense
26.9
23.6
72.4
64.2
Deferred income tax (benefit)
provision
(1.7)
(0.9)
(7.1)
17.6
Gain on bargain purchase acquisition
—
—
(5.4)
—
Net change in components of working
capital
(23.5)
(45.1)
(81.2)
(274.3)
Net change in other long-term assets and
liabilities
(3.0)
(4.8)
(9.6)
(28.6)
Net cash provided by operating
activities
618.0
576.0
1,686.9
1,469.3
Cash from investing
activities:
Capital expenditures
(74.7)
(121.0)
(267.8)
(290.2)
Proceeds from disposals of property, plant
and equipment
0.5
1.7
2.1
4.5
Purchases of investments
(79.6)
(101.3)
(218.8)
(304.6)
Sales and maturities of investments
4.0
153.2
67.8
220.6
Acquisitions, net of cash acquired
(179.4)
(213.7)
(292.6)
(288.2)
Other, net
(0.1)
7.9
4.9
7.4
Net cash used in investing activities
(329.3)
(273.2)
(704.4)
(650.5)
Cash from financing
activities:
Proceeds from issuance of senior notes and
other long-term debt
2.2
1.2
354.0
2.9
Repayments of senior notes and other
long-term debt
(3.2)
(2.7)
(10.3)
(7.5)
Proceeds from short-term borrowings
—
—
—
44.9
Repayments of short-term borrowings
—
(24.8)
—
(44.9)
(Repayments) borrowings under commercial
paper programs, net
—
(18.8)
(632.6)
111.9
Payment of costs related to debt
financing
—
—
(2.3)
(0.4)
Payment of deferred purchase price related
to acquisitions
(1.5)
—
(1.5)
—
Purchase of treasury stock
(149.3)
(170.1)
(469.8)
(560.1)
Proceeds from exercise of stock
options
160.0
71.8
323.1
114.1
Distributions to and purchases of
noncontrolling interests
(1.4)
(0.3)
(8.0)
(4.4)
Dividend payments
(125.1)
(119.1)
(375.0)
(358.4)
Net cash used in financing activities
(118.3)
(262.8)
(822.4)
(701.9)
Effect of exchange rate changes on cash
and cash equivalents
(14.0)
(66.2)
(51.7)
(125.0)
Net increase (decrease) in cash and cash
equivalents
156.4
(26.2)
108.4
(8.1)
Cash and cash equivalents balance,
beginning of period
1,325.1
1,215.2
1,373.1
1,197.1
Cash and cash equivalents balance, end of
period
$
1,481.5
$
1,189.0
$
1,481.5
$
1,189.0
Cash paid for:
Interest
$
28.8
$
32.9
$
89.1
$
86.3
Income taxes, net
99.4
140.4
423.8
387.8
AMPHENOL CORPORATION
SEGMENT INFORMATION
(Unaudited)
(dollars in millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net
sales:
Harsh Environment Solutions
$
887.3
$
793.8
$
2,630.4
$
2,311.9
Communications Solutions
1,279.2
1,518.0
3,567.6
4,216.5
Interconnect and Sensor Systems
1,032.7
983.4
3,029.2
2,855.4
Consolidated Net sales
$
3,199.2
$
3,295.2
$
9,227.2
$
9,383.8
Operating
income:
Harsh Environment Solutions
$
239.1
$
207.1
$
705.7
$
596.8
Communications Solutions
283.3
341.6
752.4
927.2
Interconnect and Sensor Systems
188.9
185.3
553.6
522.8
Stock-based compensation expense
(26.9)
(23.6)
(72.4)
(64.2)
Acquisition-related expenses
(9.0)
(12.0)
(18.4)
(12.0)
Other operating expenses
(17.5)
(17.3)
(51.3)
(50.9)
Consolidated Operating income
$
657.9
$
681.1
$
1,869.6
$
1,919.7
Operating margin
(%):
Harsh Environment Solutions
26.9%
26.1%
26.8%
25.8%
Communications Solutions
22.1%
22.5%
21.1%
22.0%
Interconnect and Sensor Systems
18.3%
18.8%
18.3%
18.3%
Stock-based compensation expense
-0.8%
-0.7%
-0.8%
-0.7%
Acquisition-related expenses
-0.3%
-0.4%
-0.2%
-0.1%
Other operating expenses
-0.5%
-0.5%
-0.6%
-0.5%
Consolidated Operating margin (%)
20.6%
20.7%
20.3%
20.5%
AMPHENOL CORPORATION SUPPLEMENTAL
FINANCIAL INFORMATION RECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES (Unaudited) (dollars in millions,
except per share data)
Management utilizes the non-GAAP financial measures defined
below as part of its internal reviews for purposes of monitoring,
evaluating and forecasting the Company’s financial performance,
communicating operating results to the Company’s Board of Directors
and assessing related employee compensation measures. Management
believes that such non-GAAP financial measures may be helpful to
investors in assessing the Company’s overall financial performance,
trends and period-over-period comparative results. Non-GAAP
financial measures related to net sales exclude the impact of
foreign currency exchange rates and acquisitions. Non-GAAP
financial measures related to operating income, operating margin,
net income attributable to Amphenol Corporation, effective tax rate
and diluted EPS exclude income and expenses that are not directly
related to the Company’s operating performance during the periods
presented. Items excluded from such non-GAAP financial measures in
any period may consist of, without limitation, acquisition-related
expenses, refinancing-related costs, gains associated with bargain
purchase acquisitions, and certain discrete tax items including,
but not limited to, (i) the excess tax benefits related to
stock-based compensation and (ii) the impact of significant changes
in tax law. The following non-GAAP financial information is
included for supplemental purposes only and should not be
considered in isolation or as a substitute for or superior to the
related U.S. GAAP financial measures. In addition, these non-GAAP
financial measures are not necessarily the same or comparable to
similar measures presented by other companies as such measures may
be calculated differently or may exclude different items. Such
non-GAAP financial measures should be read in conjunction with the
Company’s financial statements presented in accordance with U.S.
GAAP.
The following are reconciliations of non-GAAP financial measures
to the most directly comparable U.S. GAAP financial measures for
the periods presented:
NET
SALES
Percentage Growth (relative to
same prior year period) (1)
Net sales
Foreign
Constant
Organic
growth in
currency
Currency Net
Acquisition
Net Sales
U.S. Dollars (2)
impact (3)
Sales Growth (5)
impact (4)
Growth (5)
Three Months
Ended September 30,
2023
2022
(GAAP)
(non-GAAP)
(non-GAAP)
(non-GAAP)
(non-GAAP)
Net sales by
segment:
Harsh Environment Solutions
$
887.3
$
793.8
12
%
1
%
11
%
4
%
7
%
Communications Solutions
1,279.2
1,518.0
(16)
%
(1)
%
(15)
%
1
%
(16)
%
Interconnect and Sensor Systems
1,032.7
983.4
5
%
1
%
4
%
3
%
1
%
Consolidated
$
3,199.2
$
3,295.2
(3)
%
—
%
(3)
%
2
%
(5)
%
Nine Months Ended
September 30,
Net sales by
segment:
Harsh Environment Solutions
$
2,630.4
$
2,311.9
14
%
(1)
%
14
%
4
%
10
%
Communications Solutions
3,567.6
4,216.5
(15)
%
(1)
%
(14)
%
1
%
(15)
%
Interconnect and Sensor Systems
3,029.2
2,855.4
6
%
(1)
%
7
%
3
%
4
%
Consolidated
$
9,227.2
$
9,383.8
(2)
%
(1)
%
(1)
%
2
%
(3)
%
(1)
Percentages in this table were calculated using actual, unrounded
results; therefore, the sum of the components may not add due to
rounding.
(2)
Net sales growth in U.S. dollars is calculated based on Net
sales as reported in the Condensed Consolidated Statements of
Income. While the term “net sales growth in U.S. dollars” is not
considered a U.S. GAAP financial measure, for purposes of this
table, we derive the reported (GAAP) measure based on GAAP results,
which serves as the basis for the reconciliation to its comparable
non-GAAP financial measures.
(3)
Foreign currency translation impact, a non-GAAP measure,
represents the percentage impact on net sales resulting from
foreign currency exchange rate changes in the current reporting
period(s) compared to the same respective period(s) in the prior
year. Such amount is calculated by subtracting net sales for the
current reporting period(s) translated at average foreign currency
exchange rates for the respective prior year period(s) from net
sales for the current reporting period(s), taken as a percentage of
the respective prior year period(s) net sales.
(4)
Acquisition impact, a non-GAAP measure, represents the
percentage impact on net sales resulting from acquisitions that
have not been included in the Company’s consolidated results for
the full current period(s) and/or prior comparable period(s)
presented. Such net sales related to these acquisitions do not
reflect the underlying growth of the Company on a comparative
basis. Acquisition impact is calculated as a percentage of the
respective prior year period(s) net sales.
(5)
The following are definitions of certain non-GAAP financial
measures presented in the table(s) above, which may be referred to
within this press release. For purposes of this press release, the
terms “constant currencies” and “organically” have the same meaning
as the following non-GAAP financial measures, respectively:
Constant Currency Net Sales Growth is defined as the
period-over-period percentage change in net sales growth, excluding
the impact of changes in foreign currency exchange rates. The
Company’s results are subject to volatility related to foreign
currency translation fluctuations. As such, management evaluates
the Company’s sales performance based on actual sales growth in
U.S. dollars, as well as Organic Net Sales Growth (defined below)
and Constant Currency Net Sales Growth, and believes that such
information is useful to investors to assess the underlying sales
trends.
Organic Net Sales Growth is defined as the
period-over-period percentage change in net sales growth resulting
from operating volume and pricing changes and excludes (i) the
foreign currency translation impact, which is outside the control
of the Company, and (ii) the acquisition impact, both as described
above and which do not reflect the underlying growth of the Company
on a comparative basis. Management evaluates the Company’s sales
performance based on actual sales growth in U.S. dollars, as well
as Constant Currency Net Sales Growth (defined above) and Organic
Net Sales Growth, and believes that such information is useful to
investors to assess the underlying sales trends.
AMPHENOL CORPORATION
SUPPLEMENTAL FINANCIAL
INFORMATION
RECONCILIATIONS OF GAAP TO
NON-GAAP FINANCIAL MEASURES (continued)
(Unaudited)
(dollars in millions, except
per share data)
OPERATING RESULTS
Three Months Ended September
30,
2023
2022
Net Income
Net Income
attributable to
Effective
attributable to
Effective
Operating
Operating
Amphenol
Tax
Diluted
Operating
Operating
Amphenol
Tax
Diluted
Income
Margin (i)
Corporation
Rate (i)
EPS
Income
Margin (i)
Corporation
Rate (i)
EPS
Reported (GAAP)
$
657.9
20.6
%
$
513.9
18.2
%
$
0.83
$
681.1
20.7
%
$
496.6
23.1
%
$
0.80
Acquisition-related expenses
9.0
0.3
8.4
(0.2)
0.01
12.0
0.4
10.5
(0.2)
0.02
Excess tax benefits related to stock-based
compensation
—
—
(38.3)
6.0
(0.06)
—
—
(10.6)
1.6
(0.02)
Adjusted (non-GAAP) (ii) (iii)
$
666.9
20.8
%
$
484.0
24.0
%
$
0.78
$
693.1
21.0
%
$
496.5
24.5
%
$
0.80
Nine Months Ended September
30,
2023
2022
Net Income
Net Income
attributable to
Effective
attributable to
Effective
Operating
Operating
Amphenol
Tax
Diluted
Operating
Operating
Amphenol
Tax
Diluted
Income
Margin (i)
Corporation
Rate (i)
EPS
Income
Margin (i)
Corporation
Rate (i)
EPS
Reported (GAAP)
$
1,869.6
20.3
%
$
1,413.6
20.3
%
$
2.28
$
1,919.7
20.5
%
$
1,394.8
23.4
%
$
2.24
Acquisition-related expenses
18.4
0.2
16.2
(0.1)
0.03
12.0
0.1
10.5
(0.1)
0.02
Gain on bargain purchase acquisition
—
—
(5.4)
0.1
(0.01)
—
—
—
—
—
Excess tax benefits related to stock-based
compensation
—
—
(67.3)
3.8
(0.11)
—
—
(21.9)
1.2
(0.04)
Adjusted (non-GAAP) (ii) (iii)
$
1,888.0
20.5
%
$
1,357.1
24.0
%
$
2.19
$
1,931.7
20.6
%
$
1,383.4
24.5
%
$
2.23
FREE CASH
FLOW
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Operating Cash Flow (GAAP)
$
618.0
$
576.0
$
1,686.9
$
1,469.3
Capital expenditures (GAAP)
(74.7)
(121.0)
(267.8)
(290.2)
Proceeds from disposals of property, plant
and equipment (GAAP)
0.5
1.7
2.1
4.5
Free Cash Flow (non-GAAP) (iii)
$
543.8
$
456.7
$
1,421.2
$
1,183.6
(i)
While the terms “operating
margin” and “effective tax rate” are not considered U.S. GAAP
financial measures, for purposes of this table, we derive the
reported (GAAP) measures based on GAAP results, which serve as the
basis for the reconciliation to their comparable non-GAAP financial
measures.
(ii)
All percentages and per share
amounts in this table were calculated using actual, unrounded
results; therefore, the sum of the components may not add due to
rounding.
(iii)
The following are definitions of
non-GAAP financial measures presented in the tables above, which
may be referred to within this press release:
Adjusted Operating Income is
defined as Operating income (as reported in the Condensed
Consolidated Statements of Income), excluding income and expenses
that are not directly related to the Company’s operating
performance during the periods presented.
Adjusted Operating Margin is
defined as Adjusted Operating Income (as defined above) expressed
as a percentage of Net sales (as reported in the Condensed
Consolidated Statements of Income).
Adjusted Net Income attributable to
Amphenol Corporation is defined as Net income attributable to
Amphenol Corporation (as reported in the Condensed Consolidated
Statements of Income), excluding income and expenses and their
specific tax effects that are not directly related to the Company’s
operating performance during the periods presented.
Adjusted Effective Tax Rate is
defined as Provision for income taxes (as reported in the Condensed
Consolidated Statements of Income) expressed as a percentage of
Income before income taxes (as reported in the Condensed
Consolidated Statements of Income), each excluding income and
expenses and their specific tax effects that are not directly
related to the Company’s operating performance during the periods
presented.
Adjusted Diluted EPS is defined as
diluted earnings per share (as reported in accordance with U.S.
GAAP), excluding income and expenses and their specific tax effects
that are not directly related to the Company’s operating
performance during the periods presented. Adjusted Diluted EPS is
calculated as Adjusted Net Income attributable to Amphenol
Corporation, as defined above, divided by the weighted average
outstanding diluted shares (as reported in the Condensed
Consolidated Statements of Income).
Free Cash Flow is defined as (i)
Net cash provided by operating activities (“Operating Cash Flow” -
as reported in accordance with U.S. GAAP) less (ii) capital
expenditures (as reported in accordance with U.S. GAAP), net of
proceeds from disposals of property, plant and equipment (as
reported in accordance with U.S. GAAP), all of which are derived
from the Condensed Consolidated Statements of Cash Flow. Free Cash
Flow is an important liquidity measure for the Company, as we
believe it is useful for management and investors to assess our
ability to generate cash, as well as to assess how much cash can be
used to reinvest in the growth of the Company or to return to
stockholders through either stock repurchases or dividends.
AMPHENOL CORPORATION SUPPLEMENTAL
FINANCIAL INFORMATION RECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES - GUIDANCE (Unaudited) (dollars in
millions, except per share data)
Management utilizes the non-GAAP financial measures defined
earlier as part of its internal reviews for purposes of monitoring,
evaluating and forecasting the Company’s financial performance,
communicating operating results to the Company’s Board of Directors
and assessing related employee compensation measures. Management
believes that such non-GAAP financial measures may be helpful to
investors in assessing the Company’s overall financial performance,
trends and period-over-period comparative results. Adjusted Diluted
EPS, a non-GAAP financial measure, excludes income and expenses
that are not directly related to the Company’s operating
performance during the periods presented. Items excluded from such
non-GAAP financial measures in any period may consist of, without
limitation, acquisition-related expenses, refinancing-related
costs, gains associated with bargain purchase acquisitions, and
certain discrete tax items including, but not limited to, (i) the
excess tax benefits related to stock-based compensation and (ii)
the impact of significant changes in tax law. Adjusted Diluted EPS
is not necessarily the same or comparable to similar measures
presented by other companies as such measures may be calculated
differently or may exclude different items. Such non-GAAP financial
measures should be read in conjunction with the Company’s financial
statements presented in accordance with U.S. GAAP.
The following are reconciliations of current guidance for GAAP
Diluted earnings per share (Diluted EPS) to Adjusted Diluted EPS
(non-GAAP) for both the fourth quarter and the full year 2023:
GUIDANCE (1)
FOURTH QUARTER 2023
FULL YEAR 2023
Diluted EPS (GAAP)
$0.74 - $0.76
$3.02 - $3.04
Acquisition-related costs, net of tax
$0.01
$0.04
Gain on bargain purchase acquisition
-
($0.01)
Excess tax benefits related to stock-based
compensation
-
($0.11)
Adjusted Diluted EPS (non-GAAP) (2)
$0.75 - $0.77
$2.94 - $2.96
(1)
Forward-looking Adjusted Diluted EPS reflected in our guidance
excludes certain income and expenses, described above, that are not
directly related to the Company’s operating performance. Such items
are excluded from our guidance for the forward-looking periods only
to the extent that such items have either (i) already been
reflected in periods reported and are therefore included in the
forward-looking full-year period or (ii) the Company reasonably
expects to record such items in the forward-looking periods
presented and such amounts are estimable. The Company estimates
acquisition-related costs in the fourth quarter of 2023 of
approximately $0.01 per share primarily related to the amortization
of purchase accounting backlog associated with a recent
acquisition. As such, the fourth quarter and full year 2023
guidance reflects the expected impact of these costs, and, in the
case of the full year guidance, also includes the impact of the
items that were recognized during the nine months ended September
30, 2023.
(2)
Per share amounts in this table were calculated using actual,
unrounded results; therefore, the sum of the components may not add
due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025547421/en/
Sherri Scribner Vice President, Strategy and Investor Relations
203-265-8820 IR@amphenol.com
Amphenol (NYSE:APH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Amphenol (NYSE:APH)
Historical Stock Chart
From Jul 2023 to Jul 2024