10-QPeriod: Q1 FY2016

AMPHENOL CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 5, 2016For Securities:APH

Summary

Amphenol Corporation's first quarter 2016 filing (ending March 31, 2016) reveals a company undergoing significant expansion, primarily driven by the substantial acquisition of FCI Asia Pte Ltd for approximately $1.18 billion. This acquisition led to a reported 9% increase in net sales year-over-year, reaching $1.45 billion. While the core Interconnect Products and Assemblies segment showed strong growth, contributing 94% of total sales, the Cable Products and Solutions segment saw a slight decline. The acquisition, however, also impacted profitability. Acquisition-related expenses of $30.3 million negatively affected operating income, leading to a reported operating income margin of 16.5% compared to 19.6% in the prior year. Diluted earnings per share decreased to $0.50 from $0.57. Despite these integration costs, the company generated robust operating cash flow of $194.2 million, demonstrating operational resilience. Amphenol also continued its capital allocation strategy, repurchasing shares and paying dividends.

Financial Highlights

50 data points
Beta

Revenue

$1.45B

31.6% Gross Margin

Net Income

$158.40M

10.9% Net Margin

EPS (Diluted)

$0.13

Total Assets

$7.89B

Cash & Equivalents

$687.00M

Free Cash Flow

$153.20M

Financial Statements
Beta
Revenue$1.45B
Cost of Revenue$992.00M
Gross Profit$459.20M
SG&A Expenses$189.50M
Operating Income$239.40M
Interest Expense$18.10M
Net Income$158.40M
EPS (Basic)$0.13
EPS (Diluted)$0.13
Shares Outstanding (Basic)1.23B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Net sales increased by 9% to $1.45 billion, driven largely by the significant acquisition of FCI Asia Pte Ltd, which closed in January 2016.
  • 2Operating income decreased to $239.4 million from $260.2 million year-over-year, impacted by $30.3 million in acquisition-related expenses.
  • 3Diluted earnings per share (EPS) declined to $0.50 from $0.57 in the prior year's first quarter.
  • 4Cash flow from operating activities remained strong, increasing slightly to $194.2 million from $188.3 million.
  • 5The company expanded its credit facility to $2.0 billion, demonstrating continued access to liquidity, though no borrowings were outstanding on the new facility as of March 31, 2016.
  • 6Goodwill increased significantly by $966.9 million, primarily due to the FCI acquisition.
  • 7Amphenol repurchased 1.0 million shares of common stock for $49.2 million during the quarter as part of its ongoing share repurchase program.

Frequently Asked Questions

The primary driver of the revenue increase was the acquisition of FCI Asia Pte Ltd, which closed on January 8, 2016. This acquisition contributed significantly to the overall net sales growth.

The FCI acquisition resulted in $30.3 million of acquisition-related expenses, which negatively impacted operating income and margins. While net sales increased, the reported operating income margin decreased due to these one-time costs and the fact that FCI currently operates at a lower margin than Amphenol's average.

Amphenol replaced its $1.5 billion credit facility with a new $2.0 billion facility maturing in March 2021. As of March 31, 2016, there were no borrowings under this new facility. The company also utilizes a commercial paper program and has several series of senior notes outstanding.

Amphenol generated strong operating cash flow of $194.2 million. The company continued its shareholder return program by paying $43.2 million in dividends and repurchasing $49.2 million of its common stock during the quarter. The FCI acquisition was funded by cash and short-term investments held outside the U.S.