Amphenol Corporation (NYSE:APH) reported today GAAP Diluted
Earnings Per Share (“EPS”) for the first quarter 2018 of $0.84
compared to $0.71 for the comparable 2017 period. GAAP Diluted EPS
for the first quarter 2018 includes an excess tax benefit of
approximately $4.1 million ($0.01 per share) related to stock
options exercised during the quarter compared to approximately $8.0
million ($0.02 per share) for the comparable 2017 period. Excluding
the effect of this item, Adjusted Diluted EPS1 for first quarter
2018 and 2017 was $0.83 and $0.69, respectively.
Sales for the first quarter 2018 were $1.867 billion compared to
$1.560 billion for the comparable 2017 period. Currency translation
had the effect of increasing sales by approximately $63 million in
the first quarter of 2018 compared to the 2017 period.
On April 24, 2018, the Company’s Board of Directors approved a
21% increase in the Company’s dividend as well as a new three-year
open market stock repurchase plan. The quarterly dividend will
increase from $0.19 to $0.23 per share to be paid on July 10, 2018
to holders of record of the Company’s Class A common stock as of
June 18, 2018. The new three-year open market stock repurchase plan
is authorized for the purchase of up to $2 billion of the Company’s
common stock.
Amphenol President and Chief Executive Officer, R. Adam Norwitt,
stated, “We are pleased to close the first quarter 2018 above the
high end of our guidance with sales and Adjusted Diluted EPS in the
quarter of $1.867 billion and $0.83, respectively. Compared to the
first quarter 2017, sales increased a strong 20%, reflecting
organic growth across most of the Company’s diversified end
markets, including, in particular, mobile devices, military,
industrial, automotive, and commercial air, together with
contributions from the Company’s successful acquisition program.
The Company continues to expand its growth opportunities through a
deep commitment to developing enabling technologies for customers
in all markets, an ongoing strategy of market and geographic
diversification, as well as an active and successful acquisition
program. The Company’s Adjusted Diluted EPS growth of 20% in the
quarter was driven by our superior operating execution, as
reflected in the Company’s achievement of a strong operating margin
of 20.2%. I am very proud of our organization as we continue to
execute extremely well.”
“Operating cash flow in the quarter was $130 million which
included an $81 million payment made in the first quarter to fully
fund our U.S. defined benefit pension plans. The Company continues
to deploy its financial strength in a variety of ways to increase
shareholder value. This included the purchase during the first
quarter of 2018 of 4.2 million shares of the Company’s stock
bringing total repurchases under the plan since inception in
January 2017 to approximately 12.6 million shares, which completed
our $1 billion open market stock repurchase plan”.
“While we are pleased that the overall demand environment has
improved, there remain many uncertainties surrounding global trade
and economic policy. Considering this environment and based on
current currency exchange rates, we expect second quarter 2018
sales in the range of $1.855 billion to $1.895 billion and Adjusted
Diluted EPS in the range of $0.83 to $0.85. For the full year 2018,
we now expect to achieve sales in the range of $7.630 billion to
$7.750 billion, an increase over 2017 of 9% to 11%, as well as
Adjusted Diluted EPS in the range of $3.49 to $3.55, an increase
over 2017 of 12% to 14%.
“The electronics revolution continues to create exciting,
long-term growth opportunities for Amphenol. We are encouraged by
the Company’s broad-based and strong results, and we remain
confident for the future. New applications and higher performance
requirements continue to drive increased demand for our broadened
range of high technology products across all our diversified end
markets. Our ongoing actions to leverage our competitive advantages
and create sustained financial strength, as well as our initiatives
to expand our high technology product offering both organically and
through our successful acquisition program, have created an
excellent base for future performance. I am confident in the
ability of our outstanding, entrepreneurial management team to
dynamically adjust to the always changing environment, to continue
to generate strong profitability and to further capitalize on the
many opportunities to expand our market position.”
The Company will host a conference call to discuss its first
quarter results at 1:00 PM (EDT) Wednesday, April 25, 2018. The
toll-free dial-in number to participate in this call is
888-455-0949; International dial-in number is 773-799-3973;
Passcode: LAMPO. There will be a replay available until 10:59 PM
(EDT) on Friday, May 25, 2018. The replay numbers are toll free
800-739-2829; International toll number is 203-369-3330; Passcode:
7183.
A live broadcast as well as a replay will also be available on
the Internet at http://www.amphenol.com/investors/webcasts.php.
Amphenol Corporation is one of the world’s largest designers,
manufacturers and marketers of electrical, electronic and fiber
optic connectors, interconnect systems, antennas, sensors and
sensor-based products and coaxial and high-speed specialty cable.
Amphenol designs, manufactures and assembles its products at
facilities in the Americas, Europe, Asia, Australia and Africa and
sells its products through its own global sales force, independent
representatives and a global network of electronics distributors.
Amphenol has a diversified presence as a leader in high growth
areas of the interconnect market including: Automotive, Broadband
Communications, Commercial Aerospace, Industrial, Information
Technology and Data Communications, Military, Mobile Devices and
Mobile Networks.
Forward-Looking Statements
This press release may include forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, which relate to future, not past, events and are subject to
risks and uncertainties. The forward-looking statements, which
address the Company’s expected business and financial performance
and financial condition, among other matters, may contain words
such as: “anticipate,” “could,” “continue,” “expect,” “estimate,”
“forecast,” “ongoing,” “project,” “seek,” “predict,” “target,”
“will,”, “intend,” “plan,” “optimistic,” “potential,” “guidance,”
“may,” “should,” or “would” and other words and terms of similar
meaning. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain, such as statements about
expected earnings, revenues, growth, liquidity or other financial
matters. Although the Company believes the expectations reflected
in such forward-looking statements, including regarding the second
quarter and full year 2018 sales expectations and GAAP and Adjusted
Diluted EPS expectations, are based upon reasonable assumptions,
the expectations may not be attained or there may be material
deviation. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
on which they are made.
Factors that could cause actual results to differ materially
from these forward-looking statements, include, but are not limited
to, the following: the Company’s dependence on sales to the
communications industry, in which markets are dominated by large
manufacturers and operators who regularly exert significant
pressure on suppliers such as the Company; the Company’s dependence
on sales to the military market, including the impact of reductions
or changes in the defense budgets of U.S. and foreign governments;
the Company’s ability to compete successfully on the basis of
technology innovation, product quality, price, customer service and
delivery time; the Company’s ability to continue to conceive,
design, source and market new products, as well as market
acceptance of the Company’s existing and future product lines, for
continued revenue growth; the Company’s ability to access the
capital markets on favorable terms, including as a result of
significant deterioration of general economic or capital market
conditions, or as a result of a downgrade in the Company’s credit
rating; changes in exchange rates of the various currencies in
which the Company conducts business, including possible currency
devaluations; changes in interest rates which could impact existing
or future issuances of debt; changes in tax laws, regulations and
guidance, including related interpretations, in the United States
and international jurisdictions, such as the U.S. Tax Cuts and Jobs
Act (“Tax Act”); political, economic, military and other risks in
countries outside of the United States, including political,
economic, financial or other instability, intergovernmental
conflicts or actions, strikes or natural disasters; the impact of
general economic conditions, geopolitical conditions and U.S. trade
policies, legislation, treaties and tariffs, including those
affecting China, on the Company’s business operations; difficulties
and unanticipated expenses in connection with purchasing and
integrating newly acquired businesses as part of the Company’s
growth strategy, including the potential for the impairment of
goodwill; the Company’s ability to obtain a consistent supply of
materials, at stable pricing levels, used in the Company’s
manufacturing processes, including aluminum, steel, copper,
titanium, metal alloys, gold, silver, certain rare earth metals and
plastic resins; litigation or environmental matters including
changes to laws and regulations that the Company may be subject to;
and cybersecurity threats or incidents that could arise. Such
forward-looking statements may also be impacted by, among other
things, clarifications to and additional guidance under the Tax
Act. More specifically, on December 22, 2017, the Tax Act was
enacted and it significantly revised U.S. corporate income tax law
by, among other things, reducing the U.S. corporate income tax rate
to 21% and implementing a modified territorial tax system that
includes a one-time transition tax on deemed repatriated earnings
of foreign subsidiaries. The provisional income tax charge recorded
in the fourth quarter of 2017 incorporated assumptions made based
upon the Company’s current interpretation of the Tax Act. As the
Company receives additional clarification and implementation
guidance and as the interpretation of the Tax Act evolves over
time, the Company may record adjustments to such charge in
2018.
A further description of these uncertainties and other risks can
be found in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2017, Quarterly Reports on Form 10-Q and the
Company’s other reports filed with the Securities and Exchange
Commission. These or other uncertainties may cause the Company’s
actual future results to be materially different than those
expressed in any forward-looking statements. The Company undertakes
no obligation to update or revise any forward-looking
statements.
Non-GAAP
Financial Measures
The financial statements included within this press release are
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”). This press
release also contains certain non-GAAP financial information,
including Adjusted Operating Income, Adjusted Operating Margin,
Adjusted Net Income attributable to Amphenol Corporation, Adjusted
Effective Tax Rate and Adjusted Diluted EPS (collectively,
“non-GAAP financial measures”), which are intended to supplement
the reported GAAP results. Management utilizes these non-GAAP
financial measures as part of its internal reviews for purposes of
monitoring, evaluating and forecasting the Company’s financial
performance, communicating operating results to the Company’s Board
of Directors and assessing related employee compensation measures.
Management believes that such non-GAAP financial measures may be
helpful to investors in assessing the Company’s overall financial
performance, trends and period-over-period comparative results.
Non-GAAP financial measures discussed within this press release
exclude income and expenses that are not directly related to the
Company’s operating performance during the periods presented. Items
excluded in the presentation of the non-GAAP financial measures in
any period may consist of, without limitation, acquisition-related
expenses, refinancing-related costs and certain discrete tax items
including but not limited to the excess tax benefits related to
stock-based compensation as well as the provisional income tax
charge recorded in 2017 related to the Tax Act and any subsequent
adjustments recorded in 2018 related to this charge.
Reconciliations of non-GAAP financial measures to the most directly
comparable GAAP financial measures are included at the end of this
press release. However, such non-GAAP financial measures should not
be considered in isolation, as a substitute for or superior to the
related GAAP financial measures. In addition, these non-GAAP
financial measures are not necessarily the same or comparable to
similar measures presented by other companies, as such measures may
be calculated differently or may exclude different items. The
non-GAAP financial measures are defined within the “Supplemental
Financial Information” table at the end of this press release and
should be read in conjunction with the Company’s financial
statements presented in accordance with GAAP.
___________________________
1 All referenced non-GAAP financial measures are defined in the
tables at the end of this press release.
AMPHENOL CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(dollars
and shares in millions, except per share data)
Three Months Ended March 31,
2018 2017 Net sales $ 1,866.9 $ 1,560.1
Cost of sales 1,260.0 1,044.2
Gross profit 606.9 515.9 Selling, general and
administrative expenses 230.0 201.8
Operating income 376.9 314.1 Interest expense (24.5 )
(19.3 ) Other income, net 2.3 3.6
Income before income taxes 354.7 298.4 Provision for
income taxes
(1) (86.4 ) (71.1 ) Net
income 268.3 227.3 Less: Net income attributable to noncontrolling
interests (2.7 ) (2.4 ) Net income
attributable to Amphenol Corporation $ 265.6 $ 224.9
Net income per common share - Basic $ 0.87 $ 0.73
Weighted average common shares outstanding - Basic
303.7 306.6 Net income per
common share - Diluted
(2) $ 0.84 $ 0.71
Weighted average common shares outstanding - Diluted
316.0 316.4 Dividends declared per
common share $ 0.19 $ 0.16
________________________
Note 1
Provision for income taxes for the three months ended
March 31, 2018 and 2017 includes excess tax benefits related to
stock-based compensation of $4.1 million ($0.01 per share) and $8.0
million ($0.02 per share), respectively.
Note 2
Net income per share for the three months ended March 31, 2018 and
2017 includes the excess tax benefits related to stock-based
compensation discussed in Note 1. Excluding these tax benefits,
Adjusted Diluted EPS, a non-GAAP financial measure which is defined
and reconciled to its most comparable GAAP financial measure in
this press release, was $0.83 and $0.69 for the three months ended
March 31, 2018 and 2017, respectively.
AMPHENOL CORPORATIONCONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited)(dollars in
millions)
March 31, December 31, 2018 2017
ASSETS Current Assets: Cash and cash equivalents $
1,000.2 $ 1,719.1 Short-term investments 24.1
34.6 Total cash, cash equivalents and
short-term investments 1,024.3 1,753.7 Accounts receivable, less
allowance for doubtful accounts of $23.9 and $23.0, respectively
1,515.8 1,598.6 Inventories 1,166.8 1,106.9 Other current assets
230.2 196.8 Total
current assets 3,937.1 4,656.0 Property, plant and
equipment, less accumulated depreciation of $1,257.4 and $1,200.1,
respectively 839.3 816.8 Goodwill 4,146.5 4,042.6 Intangibles, net
and other long-term assets 480.8
488.5 $ 9,403.7 $ 10,003.9
LIABILITIES & EQUITY Current
Liabilities: Accounts payable $ 798.2 $ 875.6 Accrued salaries,
wages and employee benefits 141.3 151.6 Accrued income taxes 166.3
154.2 Accrued dividends 57.4 58.1 Other accrued expenses 271.6
338.8 Current portion of long-term debt 749.9
1.1 Total current liabilities 2,184.7
1,579.4 Long-term debt, less current portion 2,489.4 3,541.5
Accrued pension and postretirement benefit obligations 190.5 272.0
Deferred income taxes 243.3 241.2 Other long-term liabilities 327.9
326.4 Equity: Common stock 0.3 0.3 Additional paid-in
capital 1,282.4 1,249.0 Retained earnings 2,770.9 2,941.5
Accumulated other comprehensive loss (139.7 )
(201.0 ) Total shareholders' equity attributable to
Amphenol Corporation 3,913.9 3,989.8 Noncontrolling
interests 54.0 53.6
Total equity 3,967.9
4,043.4 $ 9,403.7 $ 10,003.9
AMPHENOL CORPORATIONCONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOW(Unaudited)(dollars in millions)
Three Months Ended March 31, 2018
2017 Cash from operating activities: Net income $ 268.3 $
227.3 Adjustments to reconcile net income to cash provided by
operating activities: Depreciation and amortization 60.5 54.1
Stock-based compensation expense 12.7 12.1 Deferred income tax
(benefit) provision (0.2 ) 4.5 Net change in components of working
capital (133.3 ) (66.8 ) Net change in other long-term assets and
liabilities
(1) (77.8 ) 6.6 Net
cash provided by operating activities
(1) 130.2
237.8 Cash from investing activities:
Capital expenditures (54.9 ) (48.7 ) Proceeds from disposals of
property, plant and equipment 0.8 0.3 Purchases of short-term
investments (6.8 ) (18.2 ) Sales and maturities of short-term
investments 18.1 122.1 Acquisitions, net of cash acquired
(99.5 ) (46.6 ) Net cash (used in) provided by
investing activities (142.3 ) 8.9 Cash
from financing activities: (Repayments) borrowings under commercial
paper program, net (304.8 ) 225.3 Proceeds from exercise of stock
options 20.6 23.7 Distributions to shareholders of noncontrolling
interests (3.9 ) (4.2 ) Purchase and retirement of treasury stock
(382.0 ) (249.2 ) Dividend payments (58.1 ) (49.3 )
Net cash used in financing activities (728.2 )
(53.7 ) Effect of exchange rate changes on cash and cash
equivalents 21.4 15.3 Net change in cash and cash
equivalents (718.9 ) 208.3 Cash and cash equivalents
balance, beginning of period 1,719.1 1,034.6
Cash and cash equivalents balance, end of period $
1,000.2 $ 1,242.9 Cash paid for: Interest $
41.0 $ 32.4 Income taxes 75.9 77.4
_________________________
Note 1
Net change in other long-term assets and liabilities
for the three months ended March 31, 2018 includes an $81 million
payment made to fully fund the Company’s U.S. defined benefit
pension plans, which had the impact of reducing Net cash provided
by operating activities by the same amount for this period.
AMPHENOL CORPORATIONSEGMENT
INFORMATION(Unaudited)(dollars in millions)
Three months ended March 31, 2018
2017
Net
sales:
Interconnect Products and Assemblies $ 1,770.0 $ 1,463.5 Cable
Products and Solutions 96.9 96.6
Consolidated Net sales $ 1,866.9 $ 1,560.1
Operating
income:
Interconnect Products and Assemblies $ 391.1 $ 323.9 Cable Products
and Solutions 11.3 13.7 Stock-based compensation expense (12.7 )
(12.1 ) Other operating expenses (12.8 ) (11.4 )
Consolidated Operating income $ 376.9 $ 314.1
Operating margin
(%):
Interconnect Products and Assemblies 22.1 % 22.1 % Cable Products
and Solutions 11.7 % 14.2 % Stock-based compensation expense -0.7 %
-0.8 % Other operating expenses -0.7 % -0.7 %
Consolidated Operating margin (%)
20.2 % 20.1 %
AMPHENOL CORPORATIONSUPPLEMENTAL
FINANCIAL INFORMATIONRECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES(Unaudited)(dollars in millions,
except per share data)
Management utilizes the non-GAAP financial measures defined
below as part of its internal reviews for purposes of monitoring,
evaluating and forecasting the Company’s financial performance,
communicating operating results to the Company's Board of Directors
and assessing related employee compensation measures. Management
believes that such non-GAAP financial measures may be helpful to
investors in assessing the Company’s overall financial performance,
trends and period-over-period comparative results. The following
non-GAAP financial measures exclude income and expenses that are
not directly related to the Company's operating performance during
the periods presented. Items excluded in the presentation of these
non-GAAP financial measures in any period may consist of, without
limitation, acquisition-related expenses, refinancing-related
costs, and certain discrete tax items including but not limited to
(i) the excess tax benefits related to stock-based compensation and
(ii) the provisional income tax charge recorded in 2017 related to
the Tax Act and any subsequent adjustments recorded in 2018 related
to this charge. The following non-GAAP financial information is
included for supplemental purposes only and should not be
considered in isolation, as a substitute for or superior to the
related U.S. GAAP financial measures. In addition, these non-GAAP
financial measures are not necessarily the same or comparable to
similar measures presented by other companies, as such measures may
be calculated differently or may exclude different items. Such
non-GAAP financial measures should be read in conjunction with the
Company’s financial statements presented in accordance with U.S.
GAAP.
The following are reconciliations of non-GAAP financial measures
to the most directly comparable U.S. GAAP financial measures for
the periods presented:
Three Months
Ended March 31, 2018 2017 Net
Income Net Income attributable Effective
attributable Effective Operating
Operating to Amphenol Tax Diluted
Operating Operating to Amphenol Tax
Diluted Income Margin (1) Corporation
Rate (1) EPS Income Margin (1)
Corporation Rate (1) EPS Reported (GAAP) $
376.9 20.2 % $ 265.6 24.4 % $ 0.84 $ 314.1 20.1 % $ 224.9 23.8 % $
0.71 Excess tax benefits related to stock-based compensation
- - (4.1 ) 1.1 (0.01 ) - - (8.0 ) 2.7
(0.02 ) Adjusted (non-GAAP) (2) $ 376.9 20.2 % $ 261.5
25.5 % $ 0.83 $ 314.1 20.1 % $ 216.9 26.5 % $
0.69
______________________
(1) While the terms “operating margin” and “effective
tax rate” are not considered GAAP measures, for purposes of this
table, we derive the reported (GAAP) measures based on GAAP
results, which serve as the basis for the reconciliation to their
comparable non-GAAP measure. (2) The definitions of non-GAAP
financial measures used are as follows:
Adjusted Operating Income is defined
as Operating Income (as reported in the Condensed Consolidated
Statements of Income), excluding income and expenses that are not
directly related to the Company's operating performance during the
periods presented.
Adjusted Operating Margin is defined
as Adjusted Operating Income (as defined above) expressed as a
percentage of Net sales (as reported in the Condensed Consolidated
Statements of Income).
Adjusted Net Income attributable to
Amphenol Corporation is defined as Net Income attributable to
Amphenol Corporation (as reported in the Condensed Consolidated
Statements of Income), excluding income and expenses and their
specific tax effects, that are not directly related to the
Company's operating performance during the periods presented.
Adjusted Effective Tax Rate is defined
as Provision for income taxes (as reported in the Condensed
Consolidated Statements of Income) expressed as a percentage of
Income before income taxes (as reported in the Condensed
Consolidated Statements of Income), each excluding the income and
expenses and their specific tax effects that are not directly
related to the Company’s operating performance during the periods
presented.
Adjusted Diluted EPS is defined as
diluted earnings per share (as reported in accordance with U.S.
GAAP), excluding income and expenses and their specific tax
effects, that are not directly related to the Company's operating
performance during the periods presented. Adjusted Diluted EPS is
calculated as Adjusted Net Income attributable to Amphenol
Corporation, as defined above, divided by the weighted average
outstanding diluted shares (as reported in the Condensed
Consolidated Statements of Income).
AMPHENOL CORPORATIONSUPPLEMENTAL
FINANCIAL INFORMATIONRECONCILIATIONS OF GAAP TO NON-GAAP
FINANCIAL MEASURES - GUIDANCE(Unaudited)(dollars in
millions, except per share data)
Management utilizes the non-GAAP financial measures defined
earlier as part of its internal reviews for purposes of monitoring,
evaluating and forecasting the Company’s financial performance,
communicating operating results to the Company's Board of Directors
and assessing related employee compensation measures. Management
believes that such non-GAAP financial measures may be helpful to
investors in assessing the Company’s overall financial performance,
trends and period-over-period comparative results. The following
non-GAAP financial measures exclude income and expenses that are
not directly related to the Company's operating performance during
the periods presented. Items excluded in the presentation of these
non-GAAP financial measures in any period may consist of, without
limitation, acquisition-related expenses, refinancing-related
costs, and certain discrete tax items including but not limited to
(i) the excess tax benefits related to stock-based compensation and
(ii) the provisional income tax charge recorded in 2017 related to
the Tax Act and any subsequent adjustments recorded in 2018 related
to this charge. The following non-GAAP financial information is
included for supplemental purposes only and should not be
considered in isolation, as a substitute for or superior to the
related U.S. GAAP financial measures. In addition, these non-GAAP
financial measures are not necessarily the same or comparable to
similar measures presented by other companies, as such measures may
be calculated differently or may exclude different items. Such
non-GAAP financial measures should be read in conjunction with the
Company’s financial statements presented in accordance with U.S.
GAAP.
The following are reconciliations of current guidance for GAAP
Diluted earnings per share (Diluted EPS) to Adjusted Diluted EPS
(non-GAAP) for both the second quarter 2018 and the full year
2018:
GUIDANCE (1) SECOND
QUARTER 2018 FULL YEAR 2018 Diluted EPS (GAAP)
$0.83 - $0.85 $3.50 - $3.56 Excess tax benefits related to
stock-based compensation - ($0.01) Adjusted Diluted
EPS (non-GAAP) $0.83 - $0.85 $3.49 - $3.55
______________________
(1) Forward-looking Adjusted Diluted EPS included in
our guidance excludes certain income and expenses, described above,
that are not directly related to the Company's operating
performance. The Company includes such items in its guidance only
to the extent that such items have either (i) already been
reflected in periods reported and are therefore included in the
forward-looking full-year period or (ii) the Company reasonably
expects to record them in the forward-looking periods presented and
such amounts are estimable. As the Company has not identified any
estimable items in the forward-looking periods presented, the
reconciling item shown above for the full year 2018 guidance only
reflects the impact of the excess tax benefits related to
stock-based compensation that were recognized during the three
months ended March 31, 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180425005343/en/
Amphenol CorporationCraig A. Lampo, 203-265-8625Senior Vice
President andChief Financial Officerwww.amphenol.com
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