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Amphenol Reports Record Third Quarter 2021 Results and Announces Dividend Increase

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Third Quarter 2021 Highlights1:

  • Record sales of $2.818 billion, up 21% in U.S. dollars and 13% organically2 compared to the third quarter 2020

  • Record GAAP diluted EPS of $0.67, up 20% compared to the prior year period

  • Record Adjusted Diluted EPS2 of $0.65, up 18% compared to the prior year period

  • Operating Margin of 20.3%

  • Operating Cash Flow and Free Cash Flow2 of $328 million and $238 million, respectively

  • Quarterly dividend increased by 38% from $0.145 to $0.20 per share

WALLINGFORD, Conn., October 27, 2021--(BUSINESS WIRE)--Amphenol Corporation (NYSE:APH) today reported third quarter 2021 results.

"We are pleased to have closed the third quarter with sales and Adjusted Diluted EPS2 exceeding the high end of our guidance," said Amphenol President and Chief Executive Officer, R. Adam Norwitt. "Sales increased by a strong 21% in the quarter, with broad-based growth across most of our end markets, including contributions from the Company’s acquisition program.

"During the third quarter, Amphenol continued to deploy its financial strength in a variety of ways to increase shareholder value. To that end, the Company purchased 2.3 million shares of its common stock for $171 million. The Company also paid dividends of $87 million, resulting in total capital returned to shareholders during the third quarter of $258 million."

Increase in Quarterly Dividend

On October 26, 2021, the Company’s Board of Directors approved a 38% increase in the Company’s quarterly dividend, from $0.145 per share to $0.20 per share. The new dividend amount will be paid on January 12, 2022 to shareholders of record as of December 21, 2021.

Fourth Quarter and Full Year 2021 Outlook

The current market environment remains highly uncertain, with significant supply chain and inflationary challenges as well as the ongoing pandemic. Given this, and assuming constant exchange rates, for the fourth quarter 2021, Amphenol expects sales to be in the range of $2.690 billion to $2.750 billion, representing 11% to 13% growth over the fourth quarter of 2020, and Adjusted Diluted EPS2 in the range of $0.61 to $0.63, representing 7% to 11% growth over the fourth quarter of 2020. For the full year 2021, we expect sales to be in the range of $10.540 billion to $10.600 billion, representing 23% growth over 2020, and Adjusted Diluted EPS2 in the range of $2.39 to $2.41, representing 28% to 29% growth over 2020.

"Despite the ongoing challenges and uncertainties we continue to face around the world, we are pleased with the platform of strength that has been created by the Company’s performance," Mr. Norwitt continued. "The revolution in electronics is accelerating, thereby creating exciting and dynamic long-term growth opportunities for Amphenol across each of our diversified end markets. We believe these opportunities will enable a further, long-term increase in the demand for our ever expanding range of high-technology interconnect, sensor and antenna products. 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 to protect the safety and health of our employees around the world throughout the ongoing pandemic, all while 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 third quarter results at 1:00 PM (EDT) Wednesday, October 27, 2021. The toll-free dial-in number to participate in this call is 888-455-0949; International dial-in number is +1-773-799-3973; Passcode: LAMPO. There will be a replay available until 11:59 PM (EST) on Saturday, November 27, 2021. The replay numbers are toll free 866-430-5849; International toll number +1-203-369-0935; 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 https://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, in addition to the reasons noted later within this press release. 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, which relate to future events and are subject to risks and uncertainties. All statements that address events or developments that we expect or believe may or will occur in the future are 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. The 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 or other financial 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 regarding fourth quarter and full year 2021 sales and Adjusted Diluted EPS (from continuing operations), among other matters, 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.

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: 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, depending on the specific location, government regulations that inhibit our ability to operate certain of our facilities in the ordinary course and to adjust certain costs, travel restrictions, supplier constraints, supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers; uncertainties associated with a protracted economic slowdown that could negatively affect the financial condition of our customers; uncertainties and volatility in the global capital markets; political, economic, military and other risks in countries outside the United States; the impact of general economic conditions, geopolitical conditions and U.S. trade policies, legislation, trade disputes, treaties and tariffs, including those affecting China, on the Company’s business operations; 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 Company’s ability to obtain a consistent supply of materials, at stable pricing levels; 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; the Company’s ability to compete successfully on the basis of technology innovation, product quality and performance, price, customer service and delivery time; the Company’s ability to continue to conceive, design, manufacture and market new products and ability to rely upon continuing market acceptance of its existing and future product lines; 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 covenants, which could result in a default under the Company’s revolving credit facility; 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 interest rates; government contracting risks that the Company may be subject to, including laws and regulations governing performance of U.S. government contracts and related risks associated with conducting business with the U.S. government or its 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 or other laws; cybersecurity threats, malware, phishing, ransomware or other increasingly sophisticated attacks, that could impair our information technology systems and could disrupt business operations, result in a 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 and adversely impact our reputation and operating results and potentially lead to litigation and/or governmental investigations and fines; 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; and 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. 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, any potential resurgence of the crisis including from the more transmissible Delta variant strain and any future strains that may arise, future government regulations and actions in response to the crisis, the timing, availability, effectiveness and adoption rates of vaccines, 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, 2020, 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.

_____________________
1 Data throughout this press release is on a continuing operations basis and excludes results associated with discontinued operations, unless otherwise noted.
2 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,

2021

2020

2021

2020

Net sales

$

2,818.5

$

2,323.4

$

7,849.5

$

6,172.9

Cost of sales

1,928.6

1,588.5

5,388.9

4,274.4

Gross profit

889.9

734.9

2,460.6

1,898.5

Acquisition-related expenses

55.4

Selling, general and administrative expenses

318.7

259.1

893.0

748.4

Operating income

571.2

475.8

1,512.2

1,150.1

Interest expense

(29.0

)

(28.0

)

(86.7

)

(87.1

)

Other income (expense), net

1.0

(0.3

)

3.4

Income from continuing operations before income taxes

542.2

448.8

1,425.2

1,066.4

Provision for income taxes (1)

(120.5

)

(99.3

)

(302.8

)

(213.3

)

Net income from continuing operations

421.7

349.5

1,122.4

853.1

Less: Net income from continuing operations attributable to noncontrolling interests

(2.9

)

(2.9

)

(6.9

)

(6.7

)

Net income from continuing operations attributable to Amphenol Corporation

418.8

346.6

1,115.5

846.4

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes of ($1.5) and ($1.8) for 2021, respectively

7.7

10.3

Net income attributable to Amphenol Corporation

$

426.5

$

346.6

$

1,125.8

$

846.4

Net income per common share attributable to Amphenol Corporation — Basic:

Continuing operations

$

0.70

$

0.58

$

1.87

$

1.42

Discontinued operations, net of income taxes

0.01

0.02

Net income attributable to Amphenol Corporation - Basic

$

0.71

$

0.58

$

1.88

$

1.42

Weighted average common shares outstanding - Basic

597.7

597.5

597.8

595.2

Net income per common share attributable to Amphenol Corporation — Diluted:

Continuing operations (2)

$

0.67

$

0.56

$

1.79

$

1.38

Discontinued operations, net of income taxes

0.01

0.02

Net income attributable to Amphenol Corporation - Diluted (2)

$

0.68

$

0.56

$

1.80

$

1.38

Weighted average common shares outstanding - Diluted

625.8

616.4

624.6

612.5

___________________________________________

Note: Per share amounts may not add due to rounding.

Note 1

Provision for income taxes for the three months ended September 30, 2021 and 2020 includes excess tax benefits related to stock-based compensation of $12.3 million ($0.02 per share) and $10.7 million ($0.02 per share), respectively. Provision for income taxes for the nine months ended September 30, 2021 and 2020 includes excess tax benefits related to stock-based compensation of $34.3 million ($0.05 per share) and $28.1 million ($0.05 per share), respectively. Provision for income taxes for the nine months ended September 30, 2021 also includes 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. Provision for income taxes for the nine months ended September 30, 2020 also includes a discrete tax benefit of $19.9 million ($0.03 per share) related to the settlements of refund claims in a non-U.S. jurisdiction and the resulting adjustments to deferred taxes.

Note 2

Net income per share for the three months ended September 30, 2021 and 2020 includes the excess tax benefits related to stock-based compensation discussed in Note 1. Net income per share for the nine months ended September 30, 2021 and 2020 includes the excess tax benefits related to stock-based compensation and the respective discrete tax benefits, all of which are discussed in Note 1. Net income per share for the nine months ended September 30, 2021 also includes 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.

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 $0.65 and $0.55 for the three months ended September 30, 2021 and 2020, respectively, and $1.78 and $1.30 for the nine months ended September 30, 2021 and 2020, respectively.

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in millions)

September 30,

December 31,

2021

2020

ASSETS

Current Assets:

Cash and cash equivalents

$

1,268.1

$

1,702.0

Short-term investments

34.4

36.1

Total cash, cash equivalents and short-term investments

1,302.5

1,738.1

Accounts receivable, less allowance for doubtful accounts of $44.5 and $44.8, respectively

2,204.5

1,951.6

Inventories

1,952.5

1,462.2

Prepaid expenses and other current assets

392.1

338.9

Current assets held for sale

1,068.2

Total current assets

6,919.8

5,490.8

Property, plant and equipment, less accumulated depreciation of $1,881.3 and $1,738.6, respectively

1,175.4

1,054.6

Goodwill

5,839.4

5,032.1

Other intangible assets, net

603.6

397.5

Other long-term assets

387.9

352.3

$

14,926.1

$

12,327.3

LIABILITIES & EQUITY

Current Liabilities:

Accounts payable

$

1,300.0

$

1,120.7

Accrued salaries, wages and employee benefits

224.9

195.4

Accrued income taxes

101.2

112.6

Accrued dividends

86.7

86.8

Other accrued expenses

666.1

558.5

Current portion of long-term debt

298.7

230.3

Current liabilities held for sale

207.4

Total current liabilities

2,885.0

2,304.3

Long-term debt, less current portion

4,950.0

3,636.2

Accrued pension and postretirement benefit obligations

221.6

228.6

Deferred income taxes

452.2

299.1

Other long-term liabilities

408.6

407.2

Equity:

Common stock

0.6

0.6

Additional paid-in capital

2,289.5

2,068.1

Retained earnings

4,080.6

3,705.4

Treasury stock, at cost

(89.3

)

(111.1

)

Accumulated other comprehensive loss

(335.5

)

(278.1

)

Total shareholders’ equity attributable to Amphenol Corporation

5,945.9

5,384.9

Noncontrolling interests

62.8

67.0

Total equity

6,008.7

5,451.9

$

14,926.1

$

12,327.3

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(dollars in millions)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Cash from operating activities:

Net income from continuing operations

$

421.7

$

349.5

$

1,122.4

$

853.1

Adjustments to reconcile net income from continuing operations to cash provided by operating activities from continuing operations:

Depreciation and amortization

95.2

74.4

274.5

218.0

Stock-based compensation expense

21.2

19.0

60.2

51.0

Deferred income tax provision (benefit)

12.1

(10.9

)

24.9

(5.8

)

Net change in components of working capital

(219.2

)

(32.3

)

(414.1

)

38.6

Net change in other long-term assets and liabilities

(2.6

)

(1.1

)

(7.5

)

(3.9

)

Net cash provided by operating activities from continuing operations

328.4

398.6

1,060.4

1,151.0

Net cash provided by operating activities from discontinued operations

32.4

9.1

Net cash provided by operating activities

360.8

398.6

1,069.5

1,151.0

Cash from investing activities:

Capital expenditures

(90.9

)

(76.5

)

(274.2

)

(204.8

)

Proceeds from disposals of property, plant and equipment

0.8

8.9

2.4

10.8

Purchases of short-term investments

(45.8

)

(40.2

)

(128.0

)

(89.3

)

Sales and maturities of short-term investments

44.5

30.8

129.3

71.1

Acquisitions, net of cash acquired

(33.8

)

(1,531.0

)

(50.3

)

Other

2.7

(8.5

)

Net cash used in investing activities from continuing operations

(88.7

)

(110.8

)

(1,810.0

)

(262.5

)

Net cash used in investing activities from discontinued operations

(1.3

)

(4.7

)

Net cash used in investing activities

(90.0

)

(110.8

)

(1,814.7

)

(262.5

)

Cash from financing activities:

Proceeds from issuance of senior notes and other long-term debt

748.5

749.9

942.3

Repayments of senior notes and other long-term debt

(229.1

)

(1.6

)

(616.2

)

(402.9

)

Borrowings under credit facilities

1,567.4

Repayments under credit facilities

(1,568.1

)

(Repayments) borrowings under commercial paper programs, net

(476.3

)

(0.7

)

925.0

(385.9

)

Payment of costs related to debt financing

(6.1

)

(6.1

)

(8.7

)

Payment of acquisition-related contingent consideration

(75.0

)

Proceeds from exercise of stock options

77.6

104.1

180.9

256.6

Payment of deferred purchase price related to acquisitions

(16.2

)

(4.1

)

(16.2

)

Distributions to and purchases of noncontrolling interests

(3.0

)

(1.9

)

(11.3

)

(11.5

)

Purchase of treasury stock

(170.9

)

(201.9

)

(491.0

)

(459.2

)

Dividend payments

(86.6

)

(74.6

)

(260.0

)

(223.0

)

Transfers to discontinued operations

(28.7

)

(28.7

)

Net cash provided by (used in) financing activities from continuing operations

(174.6

)

(192.8

)

438.4

(384.2

)

Net cash used in financing activities from discontinued operations

(7.1

)

(0.1

)