10-QPeriod: Q2 FY2016

AMPHENOL CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 4, 2016For Securities:APH

Summary

Amphenol Corporation reported strong top-line growth in the second quarter and first half of 2016, with net sales increasing by 15% and 12% respectively compared to the prior year periods. This growth was significantly driven by the acquisition of FCI in January 2016, which contributed substantially to the Interconnect Products and Assemblies segment. Excluding the impact of acquisitions and foreign currency fluctuations, organic sales showed modest growth of 4% for the quarter and 1% for the year-to-date period. The company demonstrated solid operational execution, with operating income margin remaining robust. Despite increased SG&A expenses related to the FCI integration and higher interest expenses due to increased debt levels, Amphenol managed its costs effectively. The company maintained a strong liquidity position, with substantial cash flow from operations and an expanded revolving credit facility, enabling continued investment in growth initiatives, share repurchases, and dividend payments.

Financial Highlights

50 data points
Beta

Revenue

$1.55B

32.1% Gross Margin

Net Income

$208.70M

13.5% Net Margin

EPS (Diluted)

$0.16

Total Assets

$8.03B

Cash & Equivalents

$794.00M

Free Cash Flow

$195.50M

Financial Statements
Beta
Revenue$1.55B
Cost of Revenue$1.05B
Gross Profit$497.30M
SG&A Expenses$197.00M
Operating Income$300.30M
Interest Expense$18.00M
Net Income$208.70M
EPS (Basic)$0.17
EPS (Diluted)$0.16
Shares Outstanding (Basic)1.23B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Net sales increased by 15% year-over-year to $1.55 billion for the second quarter of 2016 and by 12% to $3.00 billion for the first six months of 2016.
  • 2The acquisition of FCI in January 2016 significantly contributed to the growth, particularly in the Interconnect Products and Assemblies segment.
  • 3Organic sales growth was 4% for the quarter and 1% year-to-date, excluding currency impacts and acquisitions.
  • 4Operating income for the first six months was $539.8 million, with an operating margin of 18.0%.
  • 5Cash flow from operating activities remained strong, totaling $437.8 million for the first six months of 2016.
  • 6The company expanded its revolving credit facility to $2.0 billion and had no borrowings outstanding as of June 30, 2016.
  • 7Amphenol repurchased 2.0 million shares of common stock for $108.4 million during the first six months of 2016 and continued its share repurchase program.

Frequently Asked Questions

The acquisition of FCI in January 2016 significantly boosted Amphenol's net sales, particularly in the Interconnect Products and Assemblies segment. While it contributed to higher SG&A expenses and increased goodwill on the balance sheet, it was a key driver of the reported revenue growth for the period.

Amphenol maintained strong operating margins, with the overall margin slightly decreasing year-over-year for the six-month period primarily due to the integration of FCI, which operates at a lower margin than the company average. However, the Cable Products and Solutions segment saw an improvement in its operating margin.

Amphenol demonstrated strong liquidity, generating significant cash flow from operations. The company also expanded its revolving credit facility to $2.0 billion, providing ample financial flexibility. It continues to fund operating and capital expenditures, product development, share repurchases, and dividends through its internally generated cash and available credit facilities.

Amphenol continues to execute its share repurchase program, buying back shares and retiring treasury stock. The company also increased its quarterly dividend rate in the third quarter of 2015 and has been consistently paying dividends, reflecting a commitment to returning value to shareholders.