Why did Amphenol raise its dividend, and what is the new payout?

The Board approved a 50% increase in the quarterly dividend, from $0.11 to $0.165 per share, reflecting the company's strong cash generation and the June 2024 2-for-1 stock split (the figures are split-adjusted). The new amount applies to dividends declared in Q3 2024, with payment on October 9, 2024 to shareholders of record as of September 17, 2024.

How much of Q2 growth came from acquisitions versus the underlying business?

Net sales rose 18% in U.S. dollars. Foreign currency was a 1% headwind, acquisitions contributed about 8%, and organic growth was about 11%. Organic growth was led by IT datacom, defense, commercial air, mobile devices, mobile networks and automotive, partly offset by moderation in broadband and industrial.

What is the difference between GAAP and Adjusted EPS this quarter?

GAAP diluted EPS was $0.41 versus Adjusted Diluted EPS of $0.44. The $0.03 gap reflects about $70 million of pre-tax acquisition-related expenses (largely CIT transaction costs and backlog and purchase-accounting amortization, about $0.05 per share after tax), partly offset by roughly $0.02 per share of excess tax benefits from stock-based compensation that is excluded from the adjusted figure. Note that the excess tax benefit is included in GAAP EPS and removed in the adjusted measure.

What does the Q3 2024 outlook imply, and what is excluded from it?

Amphenol guided Q3 sales to $3.70–$3.80 billion (+16% to +19% YoY) and Adjusted Diluted EPS to $0.43–$0.45 (+10% to +15%), assuming current market conditions and constant exchange rates. GAAP diluted EPS is guided to $0.40–$0.42, with about $0.03 per share of acquisition-related costs. The guidance excludes acquisitions that have not yet closed, such as Lutze Europe and the CommScope mobile networks businesses.

Is the increased debt a concern for investors?

Long-term debt increased to $5.04 billion from $3.98 billion at year-end 2023, and total liabilities rose to $9.54 billion, largely from financing the CIT acquisition. Cash and short-term investments declined to $1.30 billion. Operating cash flow of $664 million in the quarter, and about $1.03 billion year to date, provides meaningful coverage for interest (Q2 interest expense was $56 million) and dividends, but investors should monitor leverage as acquisitions, including CommScope's mobile networks businesses, add to borrowing needs.

APH 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 24, 2024. Cited figures are marked; the original filing is the authoritative source.

Amphenol reported record second quarter 2024 results on July 24, 2024, with net sales of $3.61 billion^a, up 18% in U.S. dollars and 11% organically versus Q2 2023.

GAAP diluted EPS was $0.41^b (up 11%), while record Adjusted Diluted EPS was $0.44 (up 22%). Adjusted Operating Margin reached a record 21.3%, versus a GAAP operating margin of 19.4%, and operating cash flow of $664 million produced free cash flow of $528 million. Growth was led by IT datacom, defense, commercial air, mobile devices, mobile networks and automotive, with contributions from acquisitions, partly offset by organic moderation in broadband and industrial markets.

Both Q2 sales and Adjusted Diluted EPS exceeded the high end of company guidance. Capital deployment remained active: the company repurchased 3.1 million shares for $190 million^c and paid $132 million in dividends, returning more than $320 million to shareholders in the quarter. The Board approved a 50% increase in the quarterly dividend, from $0.11 to $0.165 per share (post 2-for-1 stock split effective June 2024), payable October 9, 2024 to holders of record on September 17, 2024.

Acquisition activity was heavy: the Carlisle Interconnect Technologies (CIT) deal closed May 21, Lutze US closed in Q2, Lutze Europe (about $100 million^d annual sales) is expected to close in Q3, and a definitive agreement was signed to acquire CommScope's mobile networks-related businesses. For Q3 2024, Amphenol guided to sales of $3.70–$3.80 billion (up 16%–19% year over year) and Adjusted Diluted EPS of $0.43–$0.45 (up 10%–15%), excluding acquisitions not yet closed.

GAAP diluted EPS guidance is $0.40–$0.42, with roughly $0.03 per share of acquisition-related costs. Investors should weigh strong profitability and cash generation against rising leverage: long-term debt rose to $5.04 billion from $3.98 billion at year-end 2023 after the CIT financing, and acquisition-related expenses ($70 million in Q2) weighed on GAAP results.

02—Key points

Key Highlights

Record Q2 2024 net sales of $3.61B, up 18% in USD and 11% organically; both sales and Adjusted Diluted EPS exceeded the high end of guidance.
GAAP diluted EPS of $0.41 (up 11%); record Adjusted Diluted EPS of $0.44 (up 22%) and record Adjusted Operating Margin of 21.3% (GAAP 19.4%).
Dividend raised 50% to $0.165 per share (split-adjusted from $0.11), payable October 9, 2024 to holders of record September 17, 2024.
Q2 operating cash flow of $664M and free cash flow of $528M; more than $320M returned to shareholders via $190M of buybacks and $132M of dividends.
Acquisition activity: CIT closed May 21; Lutze US closed in Q2; Lutze Europe (~$100M annual sales) expected to close in Q3; agreement signed to acquire CommScope's mobile networks businesses.
Q3 2024 guidance: sales of $3.70–$3.80B (+16% to +19% YoY) and Adjusted Diluted EPS of $0.43–$0.45 (+10% to +15%), excluding unclosed acquisitions.
Balance sheet leverage increased: long-term debt rose to $5.04B from $3.98B at December 31, 2023, following the CIT acquisition financing.

03—Questions

Frequently Asked Questions

Why did Amphenol raise its dividend, and what is the new payout?
The Board approved a 50% increase in the quarterly dividend, from $0.11 to $0.165 per share, reflecting the company's strong cash generation and the June 2024 2-for-1 stock split (the figures are split-adjusted). The new amount applies to dividends declared in Q3 2024, with payment on October 9, 2024 to shareholders of record as of September 17, 2024.
How much of Q2 growth came from acquisitions versus the underlying business?
Net sales rose 18% in U.S. dollars. Foreign currency was a 1% headwind, acquisitions contributed about 8%, and organic growth was about 11%. Organic growth was led by IT datacom, defense, commercial air, mobile devices, mobile networks and automotive, partly offset by moderation in broadband and industrial.
What is the difference between GAAP and Adjusted EPS this quarter?
GAAP diluted EPS was $0.41 versus Adjusted Diluted EPS of $0.44. The $0.03 gap reflects about $70 million of pre-tax acquisition-related expenses (largely CIT transaction costs and backlog and purchase-accounting amortization, about $0.05 per share after tax), partly offset by roughly $0.02 per share of excess tax benefits from stock-based compensation that is excluded from the adjusted figure. Note that the excess tax benefit is included in GAAP EPS and removed in the adjusted measure.
What does the Q3 2024 outlook imply, and what is excluded from it?
Amphenol guided Q3 sales to $3.70–$3.80 billion (+16% to +19% YoY) and Adjusted Diluted EPS to $0.43–$0.45 (+10% to +15%), assuming current market conditions and constant exchange rates. GAAP diluted EPS is guided to $0.40–$0.42, with about $0.03 per share of acquisition-related costs. The guidance excludes acquisitions that have not yet closed, such as Lutze Europe and the CommScope mobile networks businesses.
Is the increased debt a concern for investors?
Long-term debt increased to $5.04 billion from $3.98 billion at year-end 2023, and total liabilities rose to $9.54 billion, largely from financing the CIT acquisition. Cash and short-term investments declined to $1.30 billion. Operating cash flow of $664 million in the quarter, and about $1.03 billion year to date, provides meaningful coverage for interest (Q2 interest expense was $56 million) and dividends, but investors should monitor leverage as acquisitions, including CommScope's mobile networks businesses, add to borrowing needs.

04—Continue

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