Second Quarter 2022 Highlights:
- Record sales of $3.137 billion, up 18% in U.S. dollars and
organically compared to the second quarter 2021
- Record GAAP diluted EPS of $0.76, up 29% compared to prior
year
- Record Adjusted Diluted EPS of $0.75, up 23% compared to prior
year
- Operating Margin of 20.7%
- Record Operating and Free Cash Flow of $543 million and $452
million
- Announces acquisition of NPI Solutions, Inc.
- Returned $305 million to shareholders through dividends and
buybacks
Amphenol Corporation (NYSE: APH) today reported second quarter
2022 results.
“We are pleased to have closed the second quarter of 2022 with
record sales and Adjusted Diluted EPS, both of which exceeded the
high end of our guidance,” said Amphenol President and Chief
Executive Officer, R. Adam Norwitt. “Sales increased from prior
year by a strong 18%, supported by robust growth across nearly all
our end markets, as well as contributions from the Company’s
acquisition program which were offset by the impact of the
strengthening US dollar. Despite facing continued inflationary
pressures and supply chain disruptions, we realized strong
profitability, with Operating Margin reaching 20.7% and Adjusted
Diluted EPS growing by an impressive 23% from prior year. We are
very proud of the Company’s outstanding performance in this
challenging and dynamic quarter.”
“During the second quarter, Amphenol continued to deploy its
financial strength in a variety of ways to increase shareholder
value. The Company purchased 2.7 million shares of its common stock
for $186 million. The Company also paid dividends of $119 million,
resulting in total capital returned to shareholders during the
second quarter of $305 million.”
“We remain focused on expanding our growth opportunities through
a deep commitment to developing enabling technologies for customers
across our served markets, an ongoing strategy of market and
geographic diversification and an active and successful acquisition
program. To that end, we are excited to have closed on the
acquisition of NPI Solutions, Inc. (“NPI”) in June. Based in Morgan
Hill, California and with annual sales of approximately $65
million, NPI is a manufacturer of cable assemblies and value-add
interconnect assemblies for industrial applications with a
particular focus on semiconductor manufacturing equipment. The
acquisition further strengthens our capabilities and enhances our
product offerings in the industrial market, while adding another
talented management team to the Amphenol family.”
Third Quarter 2022 Outlook
The current market environment remains highly uncertain, with
continued supply chain and inflationary challenges as well as
ongoing disruptions associated with the COVID-19 pandemic. Assuming
conditions do not meaningfully worsen and assuming constant
exchange rates, for the third quarter of 2022, Amphenol expects
sales to be in the range of $3.040 billion to $3.100 billion,
representing 8% to 10% growth over the third quarter of 2021.
Adjusted Diluted EPS is expected to be in the range of $0.73 to
$0.75, representing 12% to 15% growth over the third quarter of
2021.
“Despite the ongoing challenges and uncertainties around the
world, we are very pleased with the Company’s strong second quarter
results,” Mr. Norwitt continued. “The revolution in electronics
continues to accelerate, creating exciting and dynamic long-term
growth opportunities for Amphenol across each of our diversified
end markets. Our ongoing drive to leverage our competitive
advantages and create sustained financial strength, as well as our
initiatives to expand our product offerings, both organically and
through our acquisition program, have created an excellent base for
the Company’s future performance. I am confident in the ability of
our outstanding entrepreneurial management team to continue to
dynamically adjust to changing market conditions, to capitalize on
the wide array of growth opportunities that arise in all market
cycles and to continue to generate sustainable long-term value for
our shareholders and other stakeholders. Most importantly, I remain
truly grateful to our team for their extraordinary efforts in
navigating the myriad of challenges around the world and continuing
to strongly support our customers and drive outstanding operating
performance.”
Conference Call and Webcast Details
The Company will host a conference call to discuss its second
quarter results at 1:00 PM (EDT) on Wednesday, July 27, 2022. The
toll-free dial-in number is 888-455-0949; International dial-in
number is +1-773-799-3973; Passcode: LAMPO. A replay of the call
will be available until 11:59 PM (EDT) on Saturday, August 27,
2022. The replay numbers are toll free 800-568-3652; International
toll number +1-203-369-3289; Passcode: 7183.
A live broadcast as well as a replay of the call can be accessed
through the Investor Relations section of the company’s website at
https://investors.amphenol.com.
About Amphenol
Amphenol Corporation is one of the world’s largest designers,
manufacturers and marketers of electrical, electronic and fiber
optic connectors and 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. For more information, visit www.amphenol.com.
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” or “U.S. GAAP”).
This press release also contains certain non-GAAP financial
measures, including Adjusted Operating Income, Adjusted Operating
Margin, Adjusted Net Income from continuing operations attributable
to Amphenol Corporation, Adjusted Effective Tax Rate, Adjusted
Diluted EPS (from continuing operations), Organic Sales Growth, and
Free Cash Flow (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
related to operating income, operating margin, net income from
continuing operations attributable to Amphenol Corporation,
effective tax rate and diluted EPS (from continuing operations)
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 impact of significant changes in tax law. All non-GAAP
financial measures and their most directly comparable U.S. GAAP
financial measures presented within this press release are on a
continuing operations basis only and exclude any results associated
with discontinued operations. Non-GAAP financial measures related
to net sales exclude the impact related to foreign currency
exchange and acquisitions. 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 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. 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 U.S. GAAP.
Forward-Looking Statements
This press release may include forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
and the provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements are based on our
management’s assumptions and beliefs about future events or
circumstances using information currently available, and as a
result, they are subject to risks and uncertainties.
Forward-looking statements address events or developments that
Amphenol Corporation expects or believes may or will occur in the
future. These forward-looking statements, which address the
Company’s expected business and financial performance and financial
condition, among other matters, may contain words and terms such
as: “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “forecast,” “guidance,” “intend,” “look ahead,” “may,”
“ongoing,” “optimistic,” “plan,” “potential,” “predict,” “project,”
“seek,” “should,” “target,” “will” 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, effective tax rate or other matters, together with any
forward-looking statements related in any way to the COVID-19
pandemic, including its future impact on the Company. Although the
Company believes the expectations reflected in all forward-looking
statements, including those we may make regarding third quarter
2022 sales and Adjusted Diluted EPS, among other matters, are based
upon reasonable assumptions, the expectations may not be attained
or there may be material deviation. Readers and investors are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are
made.
There are risks and uncertainties that could cause actual
results to differ materially from these forward-looking statements,
which include, but are not limited to, the following: political,
economic, military and other risks related to operating in
countries outside the United States, as well as changes in general
economic conditions, geopolitical conditions, U.S. trade policies
(including but not limited to sanctions) and other factors beyond
the Company’s control; future risks and existing uncertainties
associated with adverse public health developments, including
epidemics and pandemics such as the COVID-19 pandemic, which
continues to disrupt our operations including government
regulations that inhibit our ability to operate certain of our
facilities in the ordinary course, travel restrictions, supplier
constraints, supply chain interruptions, logistics challenges and
limitations, labor disruptions and reduced demand from certain
customers; uncertainties associated with an economic slowdown or
recession that could negatively affect the financial condition of
our customers and could result in reduced demand; risks associated
with our inability to obtain certain raw materials and components
in the current challenging supply chain environment, as well as
inflationary risks, including the risk that the cost of certain of
the Company’s raw materials and components is increasing; negative
impacts caused by extreme weather conditions and natural
catastrophic events, including those caused by climate change and
global warming; risks associated with the improper conduct by any
of our employees, customers, suppliers, distributors or any other
business partners which could impair our business reputation and
financial results and could result in our non-compliance with
anti-corruption laws and regulations of the U.S. government and
various foreign jurisdictions; changes in exchange rates of the
various currencies in which the Company conducts business; the
risks associated with the Company’s dependence on attracting,
recruiting, hiring and retaining skilled employees, including as
part of our various management teams; the Company’s dependence on
sales to the communications industry, which markets are dominated
by large manufacturers and operators who regularly exert
significant pressure on suppliers, including the Company; changes
in defense expenditures in the military market, including the
impact of reductions or changes in the defense budgets of U.S. and
foreign governments; risks and difficulties in trying to compete
successfully on the basis of technology innovation, product quality
and performance, price, customer service and delivery time;
difficulties and unanticipated expenses in connection with
purchasing and integrating newly acquired businesses, including the
potential for the impairment of goodwill and other intangible
assets; events beyond the Company’s control that could lead to an
inability to meet its financial and other covenants, which could
result in a default under the Company’s revolving credit facility
or unsecured term loan credit facility; risks associated with the
Company’s inability to access the global 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 interest
rates; cybersecurity threats, including but not limited to malware,
phishing, credential harvesting, ransomware and other increasingly
sophisticated attacks, that could impair our information technology
systems and could disrupt business operations, result in the loss
of or inability to access confidential information and critical
business, financial or other data, and/or cause the release of
highly sensitive confidential information, any of which could
adversely impact our reputation and operating results and
potentially lead to litigation and/or governmental investigations
and fines; government contracting risks that the Company may be
subject to, including laws and regulations governing reporting
obligations, performance of government contracts and related risks
associated with conducting business with the U.S. and other foreign
governments or their suppliers (both directly and indirectly);
governmental export and import controls that certain of our
products may be subject to, including export licensing, customs
regulations, economic sanctions and other laws; changes in fiscal
and tax policies, audits and examinations by taxing authorities,
laws, regulations and guidance in the United States and foreign
jurisdictions; any difficulties in protecting the Company’s
intellectual property rights; litigation, customer claims, product
recalls, governmental investigations, criminal liability or
environmental matters including changes to laws and regulations to
which the Company may be subject; and incremental costs and other
risks that may arise in connection with regulatory efforts to
combat the negative effects of climate change. In addition, the
extent to which the COVID-19 pandemic will continue to impact our
business and financial results going forward will be dependent on
future developments such as the length and severity of the crisis,
the impact of any additional resurgences from known or new
variants, current and future government regulations and actions in
response to the crisis, the timing, availability, effectiveness and
adoption rates of vaccines and treatments, and the overall impact
of the COVID-19 pandemic on the global economy and capital markets,
among many other factors, all of which remain highly uncertain and
unpredictable.
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, 2021, 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 from those
expressed in any forward-looking statements. The Company undertakes
no obligation to update or revise any forward-looking statements
except as required by law.
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(dollars and shares in
millions, except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Net sales
$
3,136.8
$
2,653.9
$
6,088.6
$
5,031.0
Cost of sales
2,132.6
1,810.7
4,157.9
3,460.3
Gross profit
1,004.2
843.2
1,930.7
1,570.7
Acquisition-related expenses
—
55.4
—
55.4
Selling, general and administrative
expenses
355.4
311.6
692.1
574.3
Operating income
648.8
476.2
1,238.6
941.0
Interest expense
(30.5
)
(29.1
)
(58.6
)
(57.7
)
Other income (expense), net
2.3
—
4.0
(0.4
)
Income from continuing operations before
income taxes
620.6
447.1
1,184.0
882.9
Provision for income taxes (1)
(144.5
)
(78.1
)
(278.7
)
(182.2
)
Net income from continuing operations
476.1
369.0
905.3
700.7
Less: Net income from continuing
operations attributable to noncontrolling interests
(3.6
)
(1.8
)
(7.1
)
(4.0
)
Net income from continuing operations
attributable to Amphenol Corporation
472.5
367.2
898.2
696.7
Income from discontinued operations
attributable to Amphenol Corporation, net of income taxes of ($0.3)
for 2021
—
2.6
—
2.6
Net income attributable to Amphenol
Corporation
$
472.5
$
369.8
$
898.2
$
699.3
Net income per
common share attributable to Amphenol Corporation —
Basic:
Continuing operations
$
0.79
$
0.61
$
1.50
$
1.17
Discontinued operations, net of income
taxes
—
—
—
—
Net income attributable to Amphenol
Corporation - Basic
$
0.79
$
0.62
$
1.50
$
1.17
Weighted average common shares outstanding
— Basic
596.2
597.4
597.3
597.9
Net income per
common share attributable to Amphenol Corporation —
Diluted:
Continuing operations (2)
$
0.76
$
0.59
$
1.44
$
1.12
Discontinued operations, net of income
taxes
—
—
—
—
Net income attributable to Amphenol
Corporation - Diluted (2)
$
0.76
$
0.59
$
1.44
$
1.12
Weighted average common shares outstanding
— Diluted
619.7
623.8
622.6
623.9
______________________________
Note: Per share amounts may not
add due to rounding.
Note 1
Provision for income taxes for
the three months ended June 30, 2022 and 2021 includes excess tax
benefits related to stock-based compensation of $7.5 million ($0.01
per share) and $19.3 million ($0.03 per share), respectively.
Provision for income taxes for the six months ended June 30, 2022
and 2021 includes excess tax benefits related to stock-based
compensation of $11.3 million ($0.02 per share) and $22.0 million
($0.04 per share), respectively. Provision for income taxes for the
three and six months ended June 30, 2021 also included a discrete
tax benefit of $14.9 million ($0.02 per share) related to the
settlement of uncertain tax positions in certain non-U.S.
jurisdictions.
Note 2
Net income per share for the
three months ended June 30, 2022 and 2021 includes the excess tax
benefits related to stock-based compensation discussed in Note 1.
Net income per share for the three months ended June 30, 2021 also
included acquisition-related expenses of $55.4 million ($44.6
million after-tax, or $0.07 per share) comprised of transaction,
severance, restructuring and certain non-cash costs related to the
MTS acquisition, as well as the discrete tax benefit discussed in
Note 1.
Net income per share for the six
months ended June 30, 2022 and 2021 includes excess tax benefits
related to stock-based compensation discussed in Note 1. Net income
per share for the six months ended June 30, 2021 also included the
discrete tax benefit discussed in Note 1, as well as the
acquisition-related expenses discussed above.
Excluding these effects and the
impact of rounding, 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 $0.75 and $0.61 for
the three months ended June 30, 2022 and 2021, respectively, and
$1.42 and $1.13 for the six months ended June 30, 2022 and 2021,
respectively.
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(dollars in millions)
June 30,
December 31,
2022
2021
ASSETS
Current Assets:
Cash and cash equivalents
$
1,215.2
$
1,197.1
Short-term investments
119.2
44.3
Total cash, cash equivalents and
short-term investments
1,334.4
1,241.4
Accounts receivable, less allowance for
doubtful accounts of $47.9 and $43.5, respectively
2,571.6
2,454.8
Inventories
2,043.7
1,894.1
Prepaid expenses and other current
assets
361.3
367.9
Total current assets
6,311.0
5,958.2
Property, plant and equipment, less
accumulated depreciation of $1,991.6 and $1,961.6, respectively
1,155.1
1,175.3
Goodwill
6,275.0
6,376.8
Other intangible assets, net
751.2
756.9
Other long-term assets
493.8
411.2
Total Assets
$
14,986.1
$
14,678.4
LIABILITIES, REDEEMABLE NONCONTROLLING
INTEREST AND EQUITY
Current Liabilities:
Accounts payable
$
1,372.9
$
1,312.0
Accrued salaries, wages and employee
benefits
319.8
366.2
Accrued income taxes
123.6
88.8
Accrued dividends
119.1
119.8
Other accrued expenses
617.2
556.3
Current portion of long-term debt
28.1
4.0
Total current liabilities
2,580.7
2,447.1
Long-term debt, less current portion
4,834.2
4,795.9
Accrued pension and postretirement benefit
obligations
176.0
193.4
Deferred income taxes
432.1
424.2
Other long-term liabilities
421.2
438.7
Total Liabilities
8,444.2
8,299.3
Redeemable noncontrolling interest
19.9
19.0
Equity:
Common stock
0.6
0.6
Additional paid-in capital
2,477.8
2,409.0
Retained earnings
4,553.8
4,278.9
Treasury stock, at cost
(92.0
)
(100.0
)
Accumulated other comprehensive loss
(475.9
)
(286.5
)
Total stockholders’ equity attributable to
Amphenol Corporation
6,464.3
6,302.0
Noncontrolling interests
57.7
58.1
Total Equity
6,522.0
6,360.1
Total Liabilities, Redeemable
Noncontrolling Interest and Equity
$
14,986.1
$
14,678.4
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW
(Unaudited)
(dollars in millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Cash from operating
activities:
Net income from continuing operations
$
476.1
$
369.0
$
905.3
$
700.7
Adjustments to reconcile net income from
continuing operations to net cash provided by operating activities
from continuing operations:
Depreciation and amortization
90.8
102.6
182.0
179.3
Stock-based compensation expense
20.9
20.0
40.6
39.0
Deferred income tax provision
(benefit)
5.1
(1.4
)
18.5
12.8
Net change in components of working
capital
(46.4
)
(80.4
)
(229.3
)
(194.9
)
Net change in other long-term assets and
liabilities
(4.0
)
1.2
(23.8
)
(4.9
)
Net cash provided by operating activities
from continuing operations
542.5
411.0
893.3
732.0
Net cash used in operating activities from
discontinued operations
—
(23.3
)
—
(23.3
)
Net cash provided by operating
activities
542.5
387.7
893.3
708.7
Cash from investing
activities:
Capital expenditures
(91.1
)
(104.9
)
(169.2
)
(183.3
)
Proceeds from disposals of property, plant
and equipment
1.0
0.7
2.8
1.6
Purchases of investments
(103.0
)
(36.0
)
(203.3
)
(82.2
)
Sales and maturities of investments
31.6
36.3
67.4
84.8
Acquisitions, net of cash acquired
(74.5
)
(1,345.4
)
(74.5
)
(1,531.0
)
Other, net
2.8
(8.8
)
(0.5
)
(11.2
)
Net cash used in investing activities from
continuing operations
(233.2
)
(1,458.1
)
(377.3
)
(1,721.3
)
Net cash used in investing activities from
discontinued operations
—
(3.4
)
—
(3.4
)
Net cash used in investing activities
(233.2
)
(1,461.5
)
(377.3
)
(1,724.7
)
Cash from financing
activities:
Proceeds from issuance of senior notes and
other long-term debt
1.6
0.2
1.7
1.4
Repayments of senior notes and other
long-term debt
(2.4
)
(386.3
)
(4.9
)
(387.1
)
Proceeds from short-term borrowings
24.8
—
44.9
—
Repayments of short-term borrowings
(20.1
)
—
(20.1
)
—
Borrowings (repayments) under commercial
paper programs, net
(7.7
)
589.4
130.7
1,401.3
Payment of costs related to debt
financing
(0.4
)
—
(0.4
)
—
Payment of deferred purchase price related
to acquisitions
—
(4.1
)
—
(4.1
)
Purchase of treasury stock
(186.0
)
(167.3
)
(389.9
)
(320.1
)
Proceeds from exercise of stock
options
22.2
82.2
42.2
103.3
Distributions to and purchases of
noncontrolling interests
(0.4
)
(0.7
)
(4.0
)
(8.3
)
Dividend payments
(119.5
)
(86.6
)
(239.3
)
(173.4
)
Net cash (used in) provided by financing
activities from continuing operations
(287.9
)
26.8
(439.1
)
613.0
Net cash provided by financing activities
from discontinued operations
—
7.0
—
7.0
Net cash (used in) provided by financing
activities
(287.9
)
33.8
(439.1
)
620.0
Effect of exchange rate changes on cash
and cash equivalents
(53.7
)
9.3
(58.8
)
(9.1
)
Net (decrease) increase in cash and cash
equivalents
(32.3
)
(1,030.7
)
18.1
(405.1
)
Cash and cash equivalents balance,
beginning of period
1,247.5
2,327.6
1,197.1
1,702.0
Cash and cash equivalents balance, end of
period
$
1,215.2
$
1,296.9
$
1,215.2
$
1,296.9
Less: Cash and cash equivalents included
in Current assets held for sale, end of period
—
87.5
—
87.5
Cash and cash equivalents balance of
continuing operations, end of period
$
1,215.2
$
1,209.4
$
1,215.2
$
1,209.4
Cash paid for:
Interest
$
25.8
$
22.9
$
53.4
$
51.0
Income taxes, net
153.6
133.8
247.4
209.0
AMPHENOL CORPORATION
SEGMENT INFORMATION
(Unaudited)
(dollars in millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Net
sales:
Harsh Environment Solutions
$
790.4
$
696.3
$
1,518.0
$
1,324.3
Communications Solutions
1,378.5
1,115.3
2,698.6
2,143.3
Interconnect and Sensor Systems
967.9
842.3
1,872.0
1,563.4
Consolidated Net sales
$
3,136.8
$
2,653.9
$
6,088.6
$
5,031.0
Operating
income:
Harsh Environment Solutions
$
206.5
$
181.0
$
389.7
$
339.3
Communications Solutions
303.0
235.1
585.6
439.6
Interconnect and Sensor Systems
177.5
150.5
337.5
285.5
Stock-based compensation expense
(20.9
)
(20.0
)
(40.6
)
(39.0
)
Acquisition-related expenses
—
(55.4
)
—
(55.4
)
Other operating expenses
(17.3
)
(15.0
)
(33.6
)
(29.0
)
Consolidated Operating income
$
648.8
$
476.2
$
1,238.6
$
941.0
Operating margin
(%):
Harsh Environment Solutions
26.1
%
26.0
%
25.7
%
25.6
%
Communications Solutions
22.0
%
21.1
%
21.7
%
20.5
%
Interconnect and Sensor Systems
18.3
%
17.9
%
18.0
%
18.3
%
Stock-based compensation expense
-0.7
%
-0.8
%
-0.7
%
-0.8
%
Acquisition-related expenses
0.0
%
-2.1
%
0.0
%
-1.1
%
Other operating expenses
-0.6
%
-0.6
%
-0.6
%
-0.6
%
Consolidated Operating margin (%)
20.7
%
17.9
%
20.3
%
18.7
%
AMPHENOL CORPORATION SUPPLEMENTAL
FINANCIAL INFORMATION RECONCILIATIONS 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. Non-GAAP
financial measures related to net sales exclude the impact of
foreign currency exchange rates and acquisitions. Non-GAAP
financial measures related to operating income, operating margin,
net income from continuing operations attributable to Amphenol
Corporation, effective tax rate and diluted EPS from continuing
operations exclude income and expenses that are not directly
related to the Company’s operating performance during the periods
presented. Items excluded from such 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 impact of significant changes
in tax law. All non-GAAP financial measures and their most directly
comparable U.S. GAAP financial measures presented in the following
tables are on a continuing operations basis only and exclude any
results associated with discontinued operations. 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:
NET
SALES
Percentage Growth (relative to
same prior year period) (1)
Net sales
Foreign
Constant
Organic
growth in
currency
Currency Net
Acquisition
Net Sales
U.S. Dollars (2)
impact (3)
Sales Growth (5)
impact (4)
Growth (5)
Three Months
Ended June 30,
2022
2021
(GAAP)
(non-GAAP)
(non-GAAP)
(non-GAAP)
(non-GAAP)
Net sales
by:
Segment:
Harsh Environment Solutions
$
790.4
$
696.3
14
%
(3)
%
17
%
1
%
16
%
Communications Solutions
1,378.5
1,115.3
24
%
(2)
%
25
%
6
%
19
%
Interconnect and Sensor Systems
967.9
842.3
15
%
(5)
%
20
%
1
%
19
%
Consolidated
$
3,136.8
$
2,653.9
18
%
(3)
%
21
%
3
%
18
%
Six Months Ended
June 30,
Net sales
by:
Segment:
Harsh Environment Solutions
$
1,518.0
$
1,324.3
15
%
(2)
%
17
%
1
%
16
%
Communications Solutions
2,698.6
2,143.3
26
%
(1)
%
27
%
7
%
20
%
Interconnect and Sensor Systems
1,872.0
1,563.4
20
%
(4)
%
23
%
7
%
16
%
Consolidated
$
6,088.6
$
5,031.0
21
%
(2)
%
23
%
5
%
18
%
____________________________________________________________
(1)
Percentages in this table were
calculated using actual, unrounded results; therefore, the sum of
the components may not add due to rounding.
(2)
Net sales growth in U.S.
dollars is calculated based on Net sales as reported in the
Condensed Consolidated Statements of Income. While the term “net
sales growth in U.S. dollars” is not considered a U.S. GAAP
financial measure, for purposes of this table, we derive the
reported (GAAP) measure based on GAAP results, which serves as the
basis for the reconciliation to its comparable non-GAAP financial
measures.
(3)
Foreign currency translation
impact, a non-GAAP measure, represents the percentage impact on
net sales resulting from foreign currency exchange rate changes in
the current reporting period(s) compared to the same respective
period(s) in the prior year. Such amount is calculated by
subtracting net sales for the current reporting period(s)
translated at average foreign currency exchange rates for the
respective prior year period(s) from net sales for the current
reporting period(s), taken as a percentage of the respective prior
year period(s) net sales.
(4)
Acquisition impact, a
non-GAAP measure, represents the percentage impact on net sales
resulting from acquisitions that have not been included in the
Company's consolidated results for the full current period(s)
and/or prior comparable period(s) presented. Such net sales related
to these acquisitions do not reflect the underlying growth of the
Company on a comparative basis. Acquisition impact is calculated as
a percentage of the respective prior year period(s) net sales.
(5)
The following are definitions of
certain non-GAAP financial measures presented in the table(s)
above, which may be referred to within this press release. For
purposes of this press release, the terms “constant currencies” and
“organically” have the same meaning as the following non-GAAP
financial measures, respectively:
Constant Currency Net Sales
Growth is defined as the period-over-period percentage change
in net sales growth, excluding the impact of changes in foreign
currency exchange rates. The Company’s results are subject to
volatility related to foreign currency translation fluctuations. As
such, management evaluates the Company’s sales performance based on
actual sales growth in U.S. dollars, as well as Organic Net Sales
Growth (defined below) and Constant Currency Net Sales Growth, and
believes that such information is useful to investors to assess the
underlying sales trends.
Organic Net Sales Growth
is defined as the period-over-period percentage change in net sales
growth resulting from operating volume and pricing changes, and
excludes (i) the foreign currency translation impact, which is
outside the control of the Company, and (ii) the acquisition
impact, both as described above and which do not reflect the
underlying growth of the Company on a comparative basis. Management
evaluates the Company’s sales performance based on actual sales
growth in U.S. dollars, as well as Constant Currency Net Sales
Growth (defined above) and Organic Net Sales Growth, and believes
that such information is useful to investors to assess the
underlying sales trends.
AMPHENOL CORPORATION
SUPPLEMENTAL FINANCIAL
INFORMATION
RECONCILIATIONS OF GAAP TO
NON-GAAP FINANCIAL MEASURES (continued)
(Unaudited)
(dollars in millions, except
per share data)
OPERATING RESULTS
Three Months Ended June
30,
2022
2021
Net Income
Net Income
attributable to
Effective
attributable to
Effective
Operating
Operating
Amphenol
Tax
Diluted
Operating
Operating
Amphenol
Tax
Diluted
Income
Margin (i)
Corporation
Rate (i)
EPS
Income
Margin (i)
Corporation
Rate (i)
EPS
Reported (GAAP)
$
648.8
20.7
%
$
472.5
23.3
%
$
0.76
$
476.2
17.9
%
$
367.2
17.5
%
$
0.59
Acquisition-related expenses
—
—
—
—
—
55.4
2.1
44.6
(0.6
)
0.07
Excess tax benefits related to stock-based
compensation
—
—
(7.5
)
1.2
(0.01
)
—
—
(19.3
)
4.3
(0.03
)
Discrete tax item
—
—
—
—
—
—
—
(14.9
)
3.3
(0.02
)
Adjusted (non-GAAP) (ii) (iii)
$
648.8
20.7
%
$
465.0
24.5
%
$
0.75
$
531.6
20.0
%
$
377.6
24.5
%
$
0.61
Six Months Ended June
30,
2022
2021
Net Income
Net Income
attributable to
Effective
attributable to
Effective
Operating
Operating
Amphenol
Tax
Diluted
Operating
Operating
Amphenol
Tax
Diluted
Income
Margin (i)
Corporation
Rate (i)
EPS
Income
Margin (i)
Corporation
Rate (i)
EPS
Reported (GAAP)
$
1,238.6
20.3
%
$
898.2
23.5
%
$
1.44
$
941.0
18.7
%
$
696.7
20.6
%
$
1.12
Acquisition-related expenses
—
—
—
—
—
55.4
1.1
44.6
(0.3
)
0.07
Excess tax benefits related to stock-based
compensation
—
—
(11.3
)
1.0
(0.02
)
—
—
(22.0
)
2.5
(0.04
)
Discrete tax item
—
—
—
—
—
—
—
(14.9
)
1.7
(0.02
)
Adjusted (non-GAAP) (ii) (iii)
$
1,238.6
20.3
%
$
886.9
24.5
%
$
1.42
$
996.4
19.8
%
$
704.4
24.5
%
$
1.13
FREE
CASH FLOW
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Operating Cash Flow (GAAP)
$
542.5
$
411.0
$
893.3
$
732.0
Capital expenditures (GAAP)
(91.1
)
(104.9
)
(169.2
)
(183.3
)
Proceeds from disposals of property, plant
and equipment (GAAP)
1.0
0.7
2.8
1.6
Free Cash Flow (non-GAAP) (iii)
$
452.4
$
306.8
$
726.9
$
550.3
____________________________________________________________
Note: All data in the tables
above are on a continuing operations basis only and exclude results
associated with discontinued operations.
(i)
While the terms “operating
margin” and “effective tax rate” are not considered U.S. GAAP
financial 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 financial
measures.
(ii)
All percentages and per share
amounts in this table were calculated using actual, unrounded
results; therefore, the sum of the components may not add due to
rounding.
(iii)
The following are definitions of
non-GAAP financial measures presented in the tables above, which
may be referred to within this press release:
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 from
continuing operations attributable to Amphenol Corporation is
defined as Net income from continuing operations 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 from continuing operations before income taxes
(as reported in the Condensed Consolidated Statements of Income),
each 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
defined as diluted earnings per share from continuing operations
(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 from continuing operations attributable to Amphenol
Corporation, as defined above, divided by the weighted average
outstanding diluted shares (as reported in the Condensed
Consolidated Statements of Income).
Free Cash Flow is defined
as (i) Net cash provided by operating activities from continuing
operations (“Operating Cash Flow” - as reported in accordance with
U.S. GAAP) less (ii) capital expenditures (as reported in
accordance with U.S. GAAP), net of proceeds from disposals of
property, plant and equipment (as reported in accordance with U.S.
GAAP), all of which are derived from the Condensed Consolidated
Statements of Cash Flow. Free Cash Flow is an important liquidity
measure for the Company, as we believe it is useful for management
and investors to assess our ability to generate cash, as well as to
assess how much cash can be used to reinvest in the growth of the
Company or to return to stockholders through either stock
repurchases or dividends.
AMPHENOL CORPORATION SUPPLEMENTAL
FINANCIAL INFORMATION RECONCILIATIONS 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. Adjusted Diluted
EPS, a non-GAAP financial measure, excludes income and expenses
that are not directly related to the Company's operating
performance during the periods presented. Items excluded from such
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 impact of significant changes in tax law. Adjusted Diluted
EPS is 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 Company excludes the above items in its guidance for the
upcoming quarter only to the extent that the Company reasonably
expects to record such items in the forward-looking period
presented and such amounts are estimable. As the Company has not
yet identified any such items for the forward-looking period
presented, there are currently no reconciling items for the three
months ended September 30, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220727005219/en/
Sherri Scribner Vice President, Strategy and Investor Relations
203-265-8820 IR@amphenol.com
Amphenol (NYSE:APH)
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