Market Overview

Third Quarter 2017 Record Results Reported by Amphenol Corporation

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Amphenol Corporation (NYSE:APH) reported today record GAAP and Adjusted
Diluted Earnings Per Share1 (EPS) for the third quarter 2017
of $0.88. This compares to GAAP Diluted EPS of $0.71 for the comparable
2016 period. GAAP Diluted EPS for the third quarter 2016 included a
charge for acquisition-related transaction costs of $6 million ($0.02
per share). Excluding the effect of this item, Adjusted Diluted EPS for
the third quarter 2016 was $0.73. Sales for the third quarter of 2017
were a record $1.841 billion compared to $1.636 billion for the
comparable 2016 period. Currency translation had the effect of
increasing sales by approximately $13 million in the third quarter of
2017 compared to the 2016 period.

For the nine months ended September 30, 2017, GAAP Diluted EPS was
$2.39, compared to $1.86 for the comparable 2016 period. The 2017 and
2016 periods include charges for acquisition-related costs of
approximately $4 million ($0.01 per share) and $37 million ($0.11 per
share), respectively. Excluding the effect of these items, Adjusted
Diluted EPS for the nine months ended September 30, 2017 and 2016 was
$2.40 and $1.97, respectively. Sales for the nine months ended
September 30, 2017 were $5.067 billion compared to $4.635 billion for
the 2016 period. Currency translation had the effect of decreasing sales
by approximately $23 million for the first nine months of 2017 compared
to the 2016 period.

Amphenol President and Chief Executive Officer, R. Adam Norwitt, stated,
"We are extremely pleased to close the third quarter 2017 well above the
high end of our guidance, with record sales as well as record GAAP and
Adjusted Diluted EPS in the quarter of $1.841 billion and $0.88,
respectively. We achieved these record results amidst an environment of
continued geopolitical and economic policy uncertainty. Compared to the
third quarter 2016, sales increased a strong 13%, reflecting diversified
growth across the Company's markets including industrial, automotive,
mobile devices, military, broadband, commercial air, as well as IT and
data communications. Our excellent performance was driven by organic
growth as well as through the Company's successful acquisition program.
GAAP and Adjusted Diluted EPS grew by 24% and 21%, respectively, in the
quarter compared to the third quarter of 2016. This earnings growth was
driven by our strong operating results, as reflected in the Company's
achievement of an Operating Margin of 20.5% in the third quarter 2017,
as well as a lower than expected effective tax rate due to the tax
benefit from the Company's stock compensation program. I am very proud
of our organization as we continue to execute extremely well."

In addition to the strong operating results, the Company continues to
deploy its financial strength in a variety of ways to increase
shareholder value. This includes the purchase during the third quarter
of 2.0 million shares of the Company's stock under our $1 billion
two-year open market stock repurchase plan, bringing total repurchases
under the plan to approximately 7.7 million shares, or $556 million."

"There remains uncertainty related to potential government policy
changes as well as the overall geopolitical climate. Considering this
environment and based on current currency exchange rates, we expect
fourth quarter 2017 sales in the range of $1.760 billion to $1.800
billion and GAAP and Adjusted Diluted EPS in the range of $0.79 to
$0.81. For the full year 2017, we now expect to achieve sales in the
range of $6.828 billion to $6.868 billion, an increase over 2016 of 9%.
We also expect GAAP Diluted EPS of $3.18 to $3.20, an increase of 22% to
23% over 2016 and an Adjusted Diluted EPS of $3.19 to $3.21, an increase
of 17% to 18% over 2016. Our current full year guidance now reflects an
effective tax rate of approximately 23%. This compares to our prior full
year 2017 guidance of $6.620 billion to $6.700 billion in sales and GAAP
Diluted EPS of $3.05 to $3.09 and Adjusted Diluted EPS of $3.06 to
$3.10, which reflected a full year effective tax rate of approximately
23% to 24%."

"The electronics revolution continues to create exciting, long-term
growth opportunities for Amphenol. We remain very confident for the
future, with new applications and higher performance requirements
driving increased demand for our broadened range of high technology
products across all of our diversified end markets. Our ongoing actions
to strengthen our competitive advantages and build 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 management team to dynamically adjust
to the constantly 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 third quarter
results at 1:00 PM (EDT) Wednesday, October 25, 2017. 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 (EST) on Saturday, November
25, 2017. The replay numbers are toll free 800-391-9853; International
toll number is 203-369-3269; 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 contains certain statements that are intended to be
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements, other than statements
of historical facts, included in this press release that address
activities, events or developments that the Company expects or
anticipates will or may occur in the future, including, but not limited
to the Company's expectations regarding fourth quarter and full year
2017 sales and diluted EPS, are forward-looking statements.
Forward-looking statements are based on our management's current
beliefs, expectations and assumptions and on information currently
available to our management. Forward-looking statements may be
identified through the use of terms such as "expect", "may", "will",
"should", "intend", "plan", "guidance" and/or other similar expressions
generally intended to identify forward-looking statements. Such
forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and actual results may differ
materially from those projected in the forward-looking statements.
Factors that might cause or contribute to a material difference include,
but are not limited to, governmental, political, economic, end market,
competitive, technological, acquisition-related, cybersecurity and
foreign currency-related risk factors that may affect the Company's
operations, products, markets, customers and prices. Details regarding
various significant risks and uncertainties that may affect our
operating and financial performance can be found in Part I, Item 1A of
the Company's Annual Report on Form 10-K for the year ended December 31,
2016, and other Company filings with the Securities and Exchange
Commission including Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K. There may be other risks and uncertainties that we are
unable to predict at this time or that we currently do not expect to
cause actual results to differ materially from those contained in any
forward-looking statements we may make and affect our operating and
financial performance. Given these risks and uncertainties, readers are
cautioned not to place undue reliance on such forward-looking
statements. Forward-looking diluted EPS included in our fourth quarter
and full year 2017 guidance assumes that the Company will not have, in
either period, any additional income or expense that is not directly
related to the Company's operating performance during such periods.
Further details regarding these types of income and expenses are
provided below under the heading "Non-GAAP Financial Measures." To the
extent the Company has any such income or expense in such periods that
is not directly related to the Company's operating performance, then the
Company's forward-looking diluted EPS expectations for the fourth
quarter and/or full year 2017 will be adjusted to exclude such income or
expense. Forward-looking statements set forth in this press release
speak only as of the date hereof and the Company does not undertake any
obligation to revise or update these statements whether as a result of
new information, future events or otherwise, except as required by law.

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 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 non-GAAP financial measures in any period may
consist of, without limitation, acquisition-related expenses, certain
discrete tax items and refinancing-related costs that may arise during
such periods. 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 CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars and shares in millions, except per share data)
       
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net sales $ 1,840.8 $ 1,635.9 $ 5,067.4 $ 4,635.3
 
Cost of sales   1,234.7     1,098.6     3,392.8     3,141.3  
 
Gross profit 606.1 537.3 1,674.6 1,494.0
 
Acquisition-related expenses 6.3 4.0 36.6
 
Selling, general and administrative expenses   228.2     204.7     642.4     591.3  
 
Operating income 377.9 326.3 1,028.2 866.1
 
Interest expense (24.6 ) (18.1 ) (67.3 ) (54.2 )
Other income, net   5.1     2.3     12.9     5.0  
 
Income before income taxes 358.4 310.5 973.8 816.9
 
Provision for income taxes   (78.1 )   (83.4 )   (212.7 )   (222.6 )
 
Net income 280.3 227.1 761.1 594.3
Less: Net income attributable to noncontrolling interests   (2.8 )   (2.8 )   (7.2 )   (6.8 )
 
Net income attributable to Amphenol Corporation $ 277.5   $ 224.3   $ 753.9   $ 587.5  
 
Net income per common share - Basic $ 0.91   $ 0.73   $ 2.47   $ 1.91  
 
Weighted average common shares outstanding - Basic   305.0     308.9     305.8     308.3  
 
Net income per common share - Diluted (1) (2) $ 0.88   $ 0.71   $ 2.39   $ 1.86  
 
Weighted average common shares outstanding - Diluted   315.7     315.7     316.1     315.1  
 
Dividends declared per common share $ 0.19   $ 0.14   $ 0.51   $ 0.42  

________________________________

Note 1

  Earnings per share for the nine months ended September 30, 2017
included acquisition-related expenses of $4.0 million ($3.7 million
after-tax) or $0.01 per share. Excluding this effect, 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 $2.40 for the nine months ended September 30,
2017.
 

Note 2

Earnings per share for the three and nine months ended September 30,
2016 included acquisition-related expenses of $6.3 million ($5.8
million after-tax) or $0.02 per share, and $36.6 million ($33.1
million after-tax) or $0.11 per share, respectively. Excluding these
effects, 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 $0.73 and $1.97 for the three and nine
months ended September 30, 2016, respectively.
 
 
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in millions)
   
September 30, December 31,
2017 2016
ASSETS
 
Current Assets:
Cash and cash equivalents $ 1,452.2 $ 1,034.6
Short-term investments   37.4     138.6  
Total cash, cash equivalents and short-term investments 1,489.6 1,173.2
Accounts receivable, less allowance for doubtful accounts of $19.4
and $23.6, respectively
1,575.5 1,349.3
Inventories 1,098.2 928.9
Other current assets   189.6     139.8  
 
Total current assets 4,352.9 3,591.2
 
Property, plant and equipment, less accumulated depreciation of
$1,156.4 and $1,007.2, respectively
790.1 711.4
Goodwill 3,969.3 3,678.8
Intangibles, net and other long-term assets   496.5     517.3  
 
$ 9,608.8   $ 8,498.7  
 
LIABILITIES & EQUITY
 
Current Liabilities:
Accounts payable $ 826.8 $ 678.2
Accrued salaries, wages and employee benefits 143.4 131.8
Accrued income taxes 102.0 125.1
Other accrued expenses 302.5 275.6
Accrued dividends 57.9 49.3
Current portion of long-term debt   1.1     375.2  
 
Total current liabilities 1,433.7 1,635.2
 
Long-term debt, less current portion 3,559.7 2,635.5
Accrued pension and postretirement benefit obligations 285.0 288.4
Other long-term liabilities 221.1 216.5
 
Equity:
Common stock 0.3 0.3
Additional paid-in capital 1,187.8 1,020.9
Retained earnings 3,165.3 3,122.7
Accumulated other comprehensive loss   (286.2 )   (469.0 )
 
Total shareholders' equity attributable to Amphenol Corporation 4,067.2 3,674.9
 
Noncontrolling interests   42.1     48.2  
 
Total equity   4,109.3     3,723.1  
 
$ 9,608.8   $ 8,498.7  
 
 
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(dollars in millions)
   
Nine Months Ended
September 30,
2017 2016
Cash from operating activities:
Net income $ 761.1 $ 594.3
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization 168.5 163.6
Stock-based compensation expense 37.1 35.5
Excess tax benefits from stock-based compensation payment
arrangements
(33.2 )
Net change in components of working capital (252.8 ) (27.4 )
Net change in other long-term assets and liabilities   2.5     (4.1 )
 
Net cash provided by operating activities   716.4     728.7  
 
Cash from investing activities:
Capital expenditures (155.8 ) (136.3 )
Proceeds from disposals of property, plant and equipment 2.0 4.0
Purchases of short-term investments (36.1 ) (173.3 )
Sales and maturities of short-term investments 140.4 33.3
Acquisitions, net of cash acquired   (243.5 )   (1,272.6 )
 
Net cash used in investing activities   (293.0 )   (1,544.9 )
 
Cash from financing activities:
Proceeds from issuance of senior notes, net 749.3
Repayments of long-term debt (375.0 )
Borrowings under commercial paper program, net 173.6 145.8
Payment of costs related to debt financing (5.2 ) (3.0 )
Proceeds from exercise of stock options 134.4 120.8
Excess tax benefits from stock-based compensation payment
arrangements
33.2
Distributions to and purchases of noncontrolling interests (22.1 ) (5.8 )
Purchase and retirement of treasury stock (555.6 ) (229.6 )
Dividend payments   (147.1 )   (129.4 )
 
Net cash used in financing activities   (47.7 )   (68.0 )
 
Effect of exchange rate changes on cash and cash equivalents 41.9 0.6
 
Net change in cash and cash equivalents 417.6 (883.6 )
 
Cash and cash equivalents balance, beginning of period   1,034.6     1,737.2  
 
Cash and cash equivalents balance, end of period $ 1,452.2   $ 853.6  
 
Cash paid for:
Interest $ 78.0 $ 65.2
Income taxes 244.1 192.4
 
 
AMPHENOL CORPORATION
SEGMENT INFORMATION
(Unaudited)
(dollars in millions)
       
Three months ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016

Net sales:

Interconnect Products and Assemblies $ 1,731.5 $ 1,543.2 $ 4,754.3 $ 4,366.9
Cable Products and Solutions   109.3     92.7     313.1     268.4  
Consolidated Net sales $ 1,840.8   $ 1,635.9   $ 5,067.4   $ 4,635.3  
 
 

Operating income:

Interconnect Products and Assemblies $ 388.3 $ 342.0 $ 1,060.8 $ 932.2
Cable Products and Solutions 14.3 13.8 44.0 38.6
Stock-based compensation expense (12.6 ) (12.2 ) (37.1 ) (35.5 )
Other operating expenses (12.1 ) (11.0 ) (35.5 ) (32.6 )
Acquisition-related expenses       (6.3 )   (4.0 )   (36.6 )
Consolidated Operating income $ 377.9   $ 326.3   $ 1,028.2   $ 866.1  
 

 

Operating margin (%):

Interconnect Products and Assemblies 22.4 % 22.2 % 22.3 % 21.3 %
Cable Products and Solutions 13.1 % 14.9 % 14.0 % 14.4 %
Stock-based compensation expense -0.7 % -0.7 % -0.7 % -0.8 %
Other operating expenses -0.7 % -0.7 % -0.7 % -0.7 %
Acquisition-related expenses 0.0 % -0.4 % -0.1 % -0.8 %
Consolidated Operating margin (%) 20.5 % 19.9 % 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. 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 non-GAAP financial measures in any period may consist of, without
limitation, acquisition-related expenses, certain discrete tax items and
refinancing-related costs that may arise during such periods. 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.

The following are reconciliations of non-GAAP financial measures to the
most directly comparable U.S. GAAP financial measures, specifically
related to Operating Income, Operating Margin, Net Income attributable
to Amphenol Corporation, and Diluted earnings per share (Diluted EPS)
for the three and nine months ended September 30, 2017 and 2016:

               
Three Months Ended September 30,
2017 2016
Net Income Net Income
attributable attributable
Operating Operating to Amphenol Diluted Operating Operating to Amphenol Diluted
Income Margin Corporation EPS Income Margin Corporation EPS
Reported (GAAP) $ 377.9 20.5 % $ 277.5 $ 0.88 $ 326.3 19.9 % $ 224.3 $ 0.71
Acquisition-related expenses   - -   -   -   6.3 0.4   5.8   0.02
Adjusted (non-GAAP) (1) $ 377.9 20.5

%

$ 277.5 $ 0.88 $ 332.6 20.3 % $ 230.1 $ 0.73
 
 
Nine Months Ended September 30,
2017 2016
Net Income Net Income
attributable attributable
Operating Operating to Amphenol Diluted Operating Operating to Amphenol Diluted
Income Margin Corporation EPS Income Margin Corporation EPS
Reported (GAAP) $ 1,028.2 20.3 % $ 753.9 $ 2.39 $ 866.1 18.7 % $ 587.5 $ 1.86
Acquisition-related expenses   4.0 0.1   3.7   0.01   36.6 0.8   33.1   0.11
Adjusted (non-GAAP) (1) $ 1,032.2 20.4 % $ 757.6 $ 2.40 $ 902.7 19.5 % $ 620.6 $ 1.97

________________________________

(1)   Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net
Income attributable to Amphenol Corporation, and Adjusted Diluted
EPS are non-GAAP financial measures and are defined 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 related 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 or as forecasted in accordance with U.S. GAAP), excluding
income and expenses and their related 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 CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES – GUIDANCE

(Unaudited)

 

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 non-GAAP financial measures in any period may consist of, without
limitation, acquisition-related expenses, certain discrete tax items and
refinancing-related costs that may arise during such periods. 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.

The following are reconciliations of current guidance for GAAP Diluted
earnings per share (EPS) to non-GAAP Adjusted Diluted EPS for both the
fourth quarter 2017 and the full year 2017:

   
GUIDANCE (1)
FOURTH QUARTER 2017 FULL YEAR 2017
 
Diluted EPS (GAAP) $0.79 - $0.81 $3.18 - $3.20
 
Acquisition-related expenses, net of tax - $0.01
   
Adjusted Diluted EPS (non-GAAP) $0.79 - $0.81 $3.19 - $3.21
________________________________
(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: 1) already been reflected in periods reported and
are therefore included in the forward-looking full-year period, or
2) 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 2017 guidance only reflects the impact of the
acquisition-related expenses, net of tax, that were incurred during
the nine months ended September 30, 2017.
 

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