10-QPeriod: Q1 FY2014

AMPHENOL CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 7, 2014For Securities:APH

Summary

Amphenol Corporation reported a solid first quarter for 2014, with net sales increasing by 15% year-over-year to $1.246 billion. This growth was primarily driven by the Interconnect Products and Assemblies segment, which accounts for the majority of sales, experiencing a 16% increase. The company saw broad-based growth across various end markets including industrial, automotive, and data communications, bolstered by both organic growth and strategic acquisitions. Diluted earnings per share also saw an improvement, rising to $0.98 from $0.94 in the prior year quarter. The company maintained strong operating income margins, although slightly down year-over-year due to the integration of a recent acquisition with lower margins. Cash flow from operations remained robust, increasing to $202.7 million, which supported significant investments in share repurchases and capital expenditures. Amphenol's balance sheet appears healthy, with ample liquidity provided by cash reserves and an undrawn credit facility, positioning the company to meet its financial obligations and fund future growth initiatives.

Financial Highlights

49 data points
Beta

Revenue

$1.25B

31.2% Gross Margin

Net Income

$158.50M

12.7% Net Margin

EPS (Diluted)

$0.12

Total Assets

$6.23B

Cash & Equivalents

$1.02B

Free Cash Flow

$148.50M

Financial Statements
Beta
Revenue$1.25B
Cost of Revenue$857.20M
Gross Profit$388.90M
SG&A Expenses$154.80M
Operating Income$232.10M
Interest Expense$19.10M
Net Income$158.50M
EPS (Basic)$0.13
EPS (Diluted)$0.12
Shares Outstanding (Basic)1.26B
Shares Outstanding (Diluted)1.29B

Key Highlights

  • 1Net sales increased by 15% to $1.246 billion for the first quarter of 2014 compared to the prior year quarter.
  • 2The Interconnect Products and Assemblies segment, representing approximately 93% of total sales, grew by 16%.
  • 3Diluted earnings per share increased to $0.98, up from $0.94 in the first quarter of 2013.
  • 4Operating income was $232.1 million, with an operating margin of 18.6% of sales.
  • 5Cash flow provided by operating activities increased to $202.7 million.
  • 6The company repurchased approximately $121.1 million of its common stock during the quarter under its authorized repurchase program.
  • 7Amphenol has a strong liquidity position with $1.023 billion in cash, cash equivalents, and short-term investments, and a $1.5 billion revolving credit facility with $1.230 billion available.

Frequently Asked Questions

The 15% increase in net sales was driven by strong performance in the Interconnect Products and Assemblies segment, which benefited from growth in key markets such as industrial, automotive, mobile networks, commercial aerospace, and data communications. Both organic growth and contributions from acquisitions played a role in this expansion.

A recent acquisition, completed in late 2013, was fully integrated into the company's results for the first quarter of 2014. While contributing to sales growth, this acquisition has lower operating income margins than Amphenol's average, which led to a slight decrease in the consolidated operating income margin percentage compared to the prior year quarter. Additionally, acquisition-related expenses, specifically amortization of acquired backlog, impacted net income by $1.3 million or $0.01 per share.

Amphenol has a diversified debt structure including Senior Notes and borrowings under its Revolving Credit Facility. As of March 31, 2014, the company had $270 million borrowed under its $1.5 billion revolving credit facility, leaving $1.23 billion available. Total cash, cash equivalents, and short-term investments stood at $1.3 billion. Management believes its liquidity position is sufficient to meet obligations for the next twelve months.

The company is involved in legal actions arising from normal business activities, but management believes these will not have a material adverse effect. Regarding environmental matters, Amphenol is involved in cleanup and monitoring at several sites, with costs related to three specific landfill sites being fully reimbursed by Honeywell under a historical agreement. Management does not believe current or future environmental matters will materially impact the company's financial condition, results of operations, or cash flows.