01—Abstract
Summary
Summary of the 10-K filed February 17, 2017. Cited figures are marked; the original filing is the authoritative source.
Amphenol Corporation, a leading designer and manufacturer of electrical, electronic, and fiber optic connectors, interconnect systems, antennas, sensors, and related products, reported strong performance in its 2016 10-K filing.
The company demonstrated robust revenue growth, driven significantly by its largest segment, Interconnect Products and Assemblies, which accounts for 94%a of net sales. Key end markets contributing to this growth include Information Technology and Data Communications, Industrial, Automotive, and Mobile Networks. The company's strategic focus on diversification, innovation, global expansion, and cost control, coupled with a disciplined approach to strategic acquisitions, has underpinned its financial success.
The acquisition of FCI Asia Pte Ltd for approximately $1.2 billionb in early 2016 was a significant event, bolstering Amphenol's product offerings and customer base in critical growth markets. Despite the substantial investment, the company maintained strong operating income and generated healthy cash flow from operations, which it utilized for acquisitions, stock repurchases, and dividends. Amphenol's diversified end-market exposure and global manufacturing footprint provide resilience against sector-specific downturns and currency fluctuations.
02—Key points
Key Highlights
- Reported net sales of $6,286.4 million in 2016, a 13% increase from 2015, driven by strong performance in the Interconnect Products and Assemblies segment.
- Completed a significant acquisition of FCI Asia Pte Ltd for approximately $1.2 billion, enhancing its market position and product portfolio, particularly in IT and data communications, industrial, automotive, and mobile networks.
- Demonstrated operational efficiency with an operating income of $1,205.2 million (19.2% of net sales) in 2016, with adjusted operating income showing continued strength.
- Generated robust operating cash flow of $1,077.6 million in 2016, enabling strategic investments, share repurchases, and dividend payments.
- Maintained a diversified revenue stream, with approximately 72% of sales generated outside the U.S., mitigating geographic-specific risks.
- Increased its quarterly dividend rate twice in 2015 and 2016, signaling confidence in future performance and returning value to shareholders.
- The backlog of unfilled firm orders stood at approximately $1.319 billion at the end of 2016, up from $1.121 billion in 2015, indicating strong future demand.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Amphenol Corp kept $0.13.
- Revenue$6.29B100.0%
- Cost of revenue−$4.25B67.5%
- Gross profit$2.04B32.5%
- Operating costs−$834.8M13.3%
- Operating income$1.21B19.2%
- Interest, other & tax−$372.6M5.9%
- Net income$832.6M13.2%
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 17, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $6.29B$5.57B | +12.9% |
| Cost of Revenue | $4.25B$3.79B | +12.1% |
| Gross Profit | $2.04B$1.78B | +14.6% |
| R&D Expenses | $166.10M$124.70M | +33.2% |
| SG&A Expenses | $798.20M$669.10M | +19.3% |
| Operating Income | $1.21B$1.10B | +9.1% |
| Interest Expense | $72.60M$68.30M | +6.3% |
| Net Income | $832.60M$772.30M | +7.8% |
| EPS (Basic) | $0.67$0.62 | +8.1% |
| EPS (Diluted) | $0.65$0.60 | +8.3% |
| Shares Outstanding (Basic) | 1.23B1.24B | −0.3% |
| Shares Outstanding (Diluted) | 1.26B1.27B | −0.4% |
05—Questions
Frequently Asked Questions
What were Amphenol's key growth drivers in 2016?
Amphenol's primary growth drivers in 2016 were its Interconnect Products and Assemblies segment and strong performance in key end markets such as Information Technology and Data Communications, Industrial, Automotive, and Mobile Networks. The significant acquisition of FCI Asia Pte Ltd also contributed substantially to sales growth and market expansion.
How did the FCI acquisition impact Amphenol's financial performance?
The acquisition of FCI for approximately $1.2 billion in early 2016 was a strategic move that strengthened Amphenol's market position and product offerings. While it incurred acquisition-related expenses impacting reported net income, the deal contributed to overall sales growth and expanded the company's presence in critical technology sectors. Pro forma net income, excluding these expenses, remained strong.
What is Amphenol's strategy for future growth?
Amphenol's strategy centers on pursuing broad market diversification, developing performance-enhancing interconnect solutions, expanding its global presence, controlling costs, pursuing strategic acquisitions, and fostering entrepreneurial management. The company aims to leverage its technological leadership and cost-effective manufacturing to serve a wide range of industries.
How does Amphenol manage its global operations and currency risks?
Amphenol operates globally with approximately 72% of its sales generated outside the U.S. and employs the majority of its workforce internationally. To manage foreign currency exchange rate risks, the company aims to produce products in the same regions where they are sold, thus matching revenues and expenses in the same currency. They also employ cost reduction and pricing actions, and working capital management strategies.
06—Continue