01—Abstract
Summary
Summary of the 10-K filed February 13, 2019. Cited figures are marked; the original filing is the authoritative source.
Amphenol Corporation's 2018 10-K filing demonstrates a year of robust growth, with net sales reaching $8.2 billiona, a 17% increase driven by strong performance across its diverse end markets, particularly mobile devices, industrial, and automotive sectors.
The company's strategic focus on diversification, innovation, global expansion, and cost control continues to yield positive results, reflected in a significant increase in operating income and net income. Acquisitions also played a role in bolstering the company's product offerings and market presence, with a notable acquisition of SSI Controls Technologies in early 2019 to strengthen its sensor business. Financially, Amphenol maintained a strong liquidity position and actively managed its capital structure, including share repurchases and dividend payments.
The company's exposure to international markets, particularly China (32%b of sales), highlights its global reach but also presents potential risks related to geopolitical factors and currency fluctuations, as detailed in the risk factors section. Overall, the report indicates a healthy and well-managed company poised for continued growth, despite acknowledging the inherent risks in the global economic and competitive landscape.
02—Key points
Key Highlights
- Net sales increased by 17% to $8.2 billion in 2018, driven by strong performance across multiple end markets.
- Operating income grew by 18% to $1.7 billion, with an operating margin of 20.6%, indicating strong operational efficiency.
- Net income attributable to Amphenol Corporation saw a substantial increase of 85% to $1.2 billion, with diluted EPS of $3.85.
- The company continues to actively pursue growth through strategic acquisitions, investing $159 million in three acquisitions in 2018 and a significant acquisition of SSI Controls Technologies in January 2019.
- Approximately 73% of net sales were generated from international markets, with China representing a significant portion (32%).
- The company returned capital to shareholders through dividends ($0.88 per share in 2018, an increase from $0.70 in 2017) and a robust share repurchase program.
- Backlog of unfilled firm orders increased to $1.72 billion as of December 31, 2018, up from $1.61 billion in the prior year, indicating strong future demand.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Amphenol Corp kept $0.15.
- Revenue$8.20B100.0%
- Cost of revenue−$5.55B67.6%
- Gross profit$2.65B32.4%
- Operating costs−$968.0M11.8%
- Operating income$1.69B20.6%
- Interest, other & tax−$481.9M5.9%
- Net income$1.21B14.7%
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 13, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $8.20B$7.01B | +17.0% |
| Cost of Revenue | $5.55B$4.70B | +18.0% |
| Gross Profit | $2.65B$2.31B | +14.9% |
| R&D Expenses | $220.90M$193.70M | +14.0% |
| SG&A Expenses | $959.50M$878.30M | +9.2% |
| Operating Income | $1.69B$1.43B | +18.2% |
| Interest Expense | $101.70M$92.30M | +10.2% |
| Net Income | $1.21B$650.50M | +85.2% |
| EPS (Basic) | $1.00$0.53 | +87.8% |
| EPS (Diluted) | $0.96$0.52 | +86.9% |
| Shares Outstanding (Basic) | 1.20B1.22B | −1.5% |
| Shares Outstanding (Diluted) | 1.25B1.27B | −1.2% |
05—Questions
Frequently Asked Questions
What were Amphenol's key financial performance indicators for 2018?
In 2018, Amphenol reported a 17% increase in net sales to $8.2 billion, operating income of $1.7 billion (a 18% increase), and net income attributable to Amphenol Corporation of $1.2 billion (an 85% increase). Diluted Earnings Per Share (EPS) was $3.85.
How did Amphenol manage its capital structure and return value to shareholders in 2018?
Amphenol demonstrated a commitment to returning value to shareholders by increasing its quarterly dividend to $0.23 per share and actively repurchasing its common stock. The company repurchased $553.2 million worth of its common stock under its 2018 Stock Repurchase Program.
What is Amphenol's strategy for future growth, and how are acquisitions fitting into it?
Amphenol's strategy focuses on diversification across markets and products, developing innovative interconnect solutions, expanding its global presence, controlling costs, pursuing strategic acquisitions, and fostering entrepreneurial management. The company invested $159 million in three acquisitions in 2018 and acquired SSI Controls Technologies in January 2019 to enhance its sensor offerings in the automotive and industrial markets.
What are the primary risks Amphenol identified in its 2018 operations?
Key risks identified include significant exposure to non-U.S. markets (73% of sales, with China at 32%), making it susceptible to political, economic, and trade-related uncertainties. Other risks include dependence on the communications industry, the need for new product introductions, intense competition, and the potential difficulties and expenses associated with integrating acquired businesses.
06—Continue