10-QPeriod: Q3 FY2019

AMPHENOL CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 25, 2019For Securities:APH

Summary

Amphenol Corporation's (APH) Q3 2019 report indicates a slight decrease in net sales year-over-year, primarily driven by moderations in certain markets like mobile devices and IT, though offset by growth in military, aerospace, industrial, and automotive sectors. The company's Interconnect Products and Assemblies segment, which constitutes the majority of its sales, experienced a minor decline, while the Cable Products and Solutions segment saw a more notable decrease due to reduced demand from broadband service providers. Despite the slight sales dip, the company's operational efficiency remained strong, with operating income showing resilience. Significant financial activities during the period included debt management, with the issuance of new senior notes and early extinguishment of others, alongside continued share repurchases and dividend payments, demonstrating a balanced approach to capital allocation and liquidity management.

Financial Highlights

52 data points
Beta

Revenue

$2.10B

31.5% Gross Margin

Net Income

$280.30M

13.3% Net Margin

EPS (Diluted)

$0.23

Total Assets

$10.68B

Cash & Equivalents

$969.30M

Free Cash Flow

$339.10M

Financial Statements
Beta
Revenue$2.10B
Cost of Revenue$1.44B
Gross Profit$661.90M
SG&A Expenses$248.30M
Operating Income$413.60M
Interest Expense$29.70M
Net Income$280.30M
EPS (Basic)$0.24
EPS (Diluted)$0.23
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.22B

Key Highlights

  • 1Net sales for Q3 2019 were $2,100.6 million, a 1% decrease compared to $2,129.0 million in Q3 2018.
  • 2Net sales for the nine months ended September 30, 2019, increased by 2% to $6,074.4 million compared to $5,977.3 million in the same period of 2018.
  • 3Operating income for Q3 2019 was $413.6 million (19.7% of net sales), down from $444.2 million (20.9% of net sales) in Q3 2018.
  • 4The company repurchased $150.0 million of its common stock in Q3 2019 under its ongoing repurchase program.
  • 5Amphenol generated $1,078.2 million in cash flow from operating activities for the nine months ended September 30, 2019, a significant increase from $734.5 million in the prior year period.
  • 6Acquisitions played a role, with eight completed in the first nine months of 2019 for $891.2 million, contributing to an increase in goodwill and intangible assets.
  • 7The company issued new senior notes totaling $1,398.8 million in the nine months ended September 30, 2019, while also undertaking debt extinguishment activities.

Frequently Asked Questions

Net sales decreased slightly in Q3 2019 compared to Q3 2018, primarily due to moderations in markets such as mobile devices, information technology, data communications, and broadband communications. However, growth in military, commercial aerospace, industrial, and automotive markets, along with contributions from acquisitions, partially offset these declines. The Cable Products and Solutions segment saw a decrease due to reduced demand from broadband service providers.

Amphenol actively managed its debt. In the first nine months of 2019, the company issued approximately $1,398.8 million in new senior notes, including $500.0 million of 4.350% Senior Notes due 2029 and $900.0 million of 2.800% Senior Notes due 2030. Concurrently, it completed tender offers to partially extinguish outstanding 3.125% and 4.00% Senior Notes, resulting in a loss on early extinguishment of debt.

Amphenol demonstrates a balanced approach to capital allocation. The company continued its stock repurchase program, buying back $150.0 million of its common stock in Q3 2019. It also increased its quarterly dividend rate to $0.25 per share in Q3 2019. The company's strong operating cash flow generation supports these returns to shareholders while also funding strategic investments and debt management.

Acquisitions were a significant factor in the nine months ended September 30, 2019, with eight acquisitions completed for $891.2 million. These acquisitions contributed to an increase in goodwill by $646.8 million and intangible assets by $241.9 million. The company also incurred $25.4 million in acquisition-related expenses, which impacted operating income and net income.