10-QPeriod: Q1 FY2018

AMPHENOL CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 3, 2018For Securities:APH

Summary

Amphenol Corporation (APH) reported strong financial performance for the first quarter of 2018, with Net Sales increasing by 20% year-over-year to $1.87 billion. This growth was primarily driven by the Interconnect Products and Assemblies segment, which saw a 21% increase in Net Sales, fueled by demand in mobile devices, industrial, automotive, military, and commercial aerospace markets. The company's Operating Income also saw a healthy rise of 19% to $376.9 million, reflecting improved operational efficiency and strong sales. Profitability metrics showed significant improvement, with Net Income attributable to Amphenol Corporation rising to $265.6 million, a 18% increase from the prior year's quarter. This translated into a Diluted EPS of $0.84, up from $0.71 in Q1 2017. The company also continued its shareholder-friendly actions, repurchasing $382 million in stock during the quarter and increasing its quarterly dividend to $0.19 per share. The company's liquidity remains robust, with significant cash reserves and access to credit facilities, positioning it well for future growth and shareholder returns.

Financial Highlights

52 data points
Beta

Revenue

$1.87B

32.5% Gross Margin

Net Income

$265.60M

14.2% Net Margin

EPS (Diluted)

$0.21

Total Assets

$9.40B

Cash & Equivalents

$1.00B

Free Cash Flow

$75.30M

Financial Statements
Beta
Revenue$1.87B
Cost of Revenue$1.26B
Gross Profit$606.90M
SG&A Expenses$230.00M
Operating Income$376.90M
Interest Expense$24.50M
Net Income$265.60M
EPS (Basic)$0.22
EPS (Diluted)$0.21
Shares Outstanding (Basic)1.21B
Shares Outstanding (Diluted)1.26B

Key Highlights

  • 1Net Sales increased by 20% to $1.87 billion in Q1 2018 compared to Q1 2017.
  • 2Operating income grew by 19% to $376.9 million, with an operating margin of 20.2%.
  • 3Net income attributable to Amphenol Corporation increased by 18% to $265.6 million.
  • 4Diluted Earnings Per Share (EPS) rose to $0.84, up from $0.71 in the prior year quarter.
  • 5The company repurchased $382 million of its common stock during the quarter and announced a new $2 billion repurchase program.
  • 6Declared a quarterly dividend of $0.19 per share, with a subsequent increase to $0.23 announced.
  • 7The adoption of new revenue recognition standard (Topic 606) had no material impact on financial statements.

Frequently Asked Questions

The primary driver of Amphenol's revenue growth was the Interconnect Products and Assemblies segment, which experienced a 21% increase in net sales. Growth was particularly strong in markets such as mobile devices, industrial, automotive, military, and commercial aerospace.

Amphenol maintained a strong liquidity position with $1.02 billion in cash, cash equivalents, and short-term investments at the end of Q1 2018. The company also utilized its commercial paper program and revolving credit facility. Notably, net cash used in financing activities was significant due to substantial stock repurchases ($382 million) and debt repayments ($304.8 million).

The TCJA enacted in late 2017 led to a significant income tax charge of $398.5 million in Q4 2017, which was comprised of a transition tax on unremitted foreign earnings, a charge related to changes in reinvestment assertions, and a benefit from the reduced corporate tax rate. While the company recorded provisional amounts and is still finalizing the accounting, it expects the Tax Act to reduce the U.S. federal corporate income tax rate to 21%. The company has also repatriated a significant portion of its foreign cash due to the reduced tax expense associated with remitting foreign earnings.

Amphenol adopted the new revenue recognition standard (ASC Topic 606) effective January 1, 2018. The adoption was performed using a modified retrospective method and resulted in a nominal increase to retained earnings. The company stated that the adoption did not have a material impact on its condensed consolidated financial statements for the period. Similarly, the adoption of ASU 2017-07 (Compensation—Retirement Benefits) and ASU 2017-09 (Stock Compensation) also had no material impact.