10-QPeriod: Q2 FY2021

AMPHENOL CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 30, 2021For Securities:APH

Summary

Amphenol Corporation (APH) reported strong financial results for the second quarter and first six months of 2021, demonstrating a significant recovery and growth trajectory post-pandemic. Net sales surged by 34% year-over-year in Q2 2021, reaching $2.65 billion, and by 31% for the first six months to $5.03 billion. This growth was predominantly driven by the Interconnect Products and Assemblies segment, which accounts for approximately 96% of total sales, with notable strength in automotive, industrial, and IT/data communications markets. The company also saw a healthy increase in its Cable Products and Solutions segment. Profitability improved significantly, with operating income increasing by 33% in Q2 2021. Adjusted operating margin, excluding acquisition-related expenses, expanded to 20.0% in Q2 2021 from 18.0% in the prior year. Diluted EPS also saw a substantial rise, reaching $0.61 on an adjusted basis for Q2 2021. The company also highlighted strategic growth through acquisitions, notably the significant acquisition of MTS Systems Corporation, while simultaneously planning the divestiture of the MTS T&S business, showcasing effective portfolio management.

Financial Highlights

53 data points
Beta

Revenue

$2.65B

31.8% Gross Margin

Net Income

$369.80M

13.9% Net Margin

EPS (Diluted)

$0.29

Total Assets

$14.56B

Cash & Equivalents

$1.21B

Free Cash Flow

$282.80M

Financial Statements
Beta
Revenue$2.65B
Cost of Revenue$1.81B
Gross Profit$843.20M
SG&A Expenses$311.60M
Operating Income$476.20M
Interest Expense$29.10M
Net Income$369.80M
EPS (Basic)$0.31
EPS (Diluted)$0.29
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.25B

Key Highlights

  • 1Robust Net Sales Growth: Net sales increased by 34% to $2.65 billion in Q2 2021 and by 31% to $5.03 billion for the first six months of 2021, compared to the prior year periods.
  • 2Strong Segment Performance: The Interconnect Products and Assemblies segment, the company's largest, experienced significant growth driven by automotive, industrial, and IT/data communications markets.
  • 3Improved Profitability: Operating income for Q2 2021 rose by 33%, and adjusted operating margin expanded to 20.0%, indicating enhanced operational efficiency.
  • 4Significant Acquisition: The acquisition of MTS Systems Corporation in April 2021 for approximately $1.3 billion was a key strategic move, enhancing the company's sensor capabilities.
  • 5Strategic Divestiture: The planned sale of the MTS Test & Simulation business to Illinois Tool Works Inc. demonstrates a focused approach to portfolio optimization.
  • 6Shareholder Returns: Amphenol continued to return value to shareholders through dividends, increasing its quarterly dividend, and active share repurchases under its new 2021 Stock Repurchase Program.
  • 7Healthy Balance Sheet: The company maintained a solid liquidity position with $1.24 billion in cash, cash equivalents, and short-term investments as of June 30, 2021, and sufficient credit facilities.

Frequently Asked Questions

Amphenol reported strong revenue growth. Net sales increased by 34% to $2.65 billion for the three months ended June 30, 2021, and by 31% to $5.03 billion for the six months ended June 30, 2021, compared to the same periods in 2020.

The acquisition of MTS Systems Corporation, completed in April 2021, contributed approximately $740 million in goodwill, $54 million in tradename intangible assets, and $183 million in definite-lived intangible assets to Amphenol's balance sheet. The operating results of the MTS Sensors business were included in continuing operations, while the MTS T&S business was classified as held for sale and reported as discontinued operations pending divestiture. The acquisition also led to $55.4 million in acquisition-related expenses for the period.

Amphenol saw strong growth in automotive, industrial, and IT/data communications markets. While the commercial aerospace market experienced a decline due to COVID-19 impacts, other markets like military and broadband communications showed positive trends. The company expects these diverse end markets to continue to drive future growth.

Amphenol generated strong operating cash flow and maintained a healthy liquidity position. The company continued its commitment to shareholders through dividend payments, with an increase in the quarterly dividend rate, and active share repurchases under its new $2.0 billion stock repurchase program initiated in April 2021.