Amphenol Corporation (NYSE:APH) reported today third quarter
2016 GAAP Diluted earnings per share (EPS) of $0.71 compared to
$0.65 for the comparable 2015 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, third quarter 2016 Adjusted Diluted EPS1 was
$0.73. Sales for the third quarter of 2016 were a record $1.636
billion compared to $1.460 billion for the comparable 2015 period.
Currency translation had the effect of decreasing sales by
approximately $12 million in the third quarter of 2016 compared to
the 2015 period.
For the nine months ended September 30, 2016, GAAP Diluted
EPS was $1.86, compared to $1.78 for the comparable 2015 period.
The 2016 period included the $6 million of acquisition-related
transaction costs noted above, as well as a charge for
acquisition-related costs of $30 million ($0.09 per share) relating
to the acquisition of FCI Asia Pte Ltd (FCI) on January 8, 2016.
The FCI acquisition-related costs included external transaction
costs, amortization related to the value associated with acquired
backlog and restructuring charges. GAAP diluted earnings per share
for the comparable 2015 period included a charge for
acquisition-related transaction costs of $6 million ($0.02 per
share). Excluding the effect of these items, Adjusted Diluted EPS
for the nine months ended September 30, 2016 and 2015 was $1.97 and
$1.80, respectively. Sales for the nine months ended
September 30, 2016 were $4.635 billion compared to $4.138
billion for the comparable 2015 period. Currency translation had
the effect of decreasing sales by approximately $40 million for the
first nine months of 2016 compared to the comparable 2015
period.
The Company’s Board of Directors has also approved an increase
in the Company’s quarterly dividend from $0.14 to $0.16 per share
to be paid on or about January 5, 2017 to holders of record of the
Company’s Class A Common stock as of December 13, 2016.
Amphenol President and Chief Executive Officer, R. Adam Norwitt,
stated, “We are very pleased to report results above the high end
of our guidance for the third quarter 2016, with record sales and
Adjusted Diluted EPS of $1.636 billion and $0.73, respectively. We
achieved these results despite ongoing uncertainties in the global
economy. Compared to the third quarter 2015, sales increased by
12%, driven by organic growth in all markets except mobile devices
together with contributions from the Company’s successful
acquisition program. Our unique entrepreneurial culture
continues to enable strong operating results, as demonstrated by
the Company’s Adjusted Operating Margins reaching a record 20.3% in
the third quarter 2016. This excellent profitability is a direct
result of our dynamic management team’s ability to drive
disciplined operational execution together with an unrelenting
focus on all elements of cost. Operating cash flow in the quarter
was $291 million, a clear confirmation of the quality of the
Company’s earnings. I am very proud of our organization as we
continue to execute extremely well in an uncertain market
environment.
“The Company continues to expand its growth opportunities
through a deep commitment to developing enabling technologies for
customers in all markets, an ongoing strategy of market and
geographic diversification, as well as an active and successful
acquisition program. As part of that program, at the end of the
third quarter, the Company acquired All Systems Broadband. All
Systems Broadband, based in California, is a leading supplier of
cable assemblies and value added fiber optic products for the
broadband market with annual sales of approximately $40 million. In
addition, at the beginning of the fourth quarter, the Company
acquired SGX Sensortech (SGX). SGX, based in Switzerland, designs
and manufactures air quality sensors used in a variety of
automotive and industrial applications, and generates annual sales
of approximately $15 million. These acquisitions strengthen the
Company’s global capabilities and enhance our product offering in
these important end markets.
“In addition to our successful acquisition program, the Company
continues to deploy its financial strength in a variety of ways to
increase shareholder value. This includes the purchase, during the
quarter, of 2.0 million shares of the Company’s stock pursuant to
our stock repurchase plan, bringing total repurchases for the plan
to over 8.5 million shares. In addition, the Board of Directors has
approved a 14% increase in our quarterly dividend, from $0.14 to
$0.16 per share.
“The current global economic environment remains volatile and
uncertain. Considering this environment and based on current
currency exchange rates, we expect fourth quarter 2016 sales in the
range of $1.585 billion to $1.625 billion and GAAP Diluted EPS in
the range of $0.71 to $0.73. For the full year 2016, we now expect
to achieve sales in the range of $6.220 billion to $6.260 billion,
an increase over 2015 of 12% and GAAP Diluted EPS of $2.57 to
$2.59, an increase of 7% over 2015. We expect Adjusted Diluted EPS
of $2.68 to $2.70 for the full year 2016, an increase of 10% to 11%
over 2015. This compares to our prior full year 2016 guidance of
$6.120 billion to $6.200 billion in sales, GAAP Diluted EPS of
$2.51 to $2.55 and Adjusted Diluted EPS of $2.60 to $2.64.
“Notwithstanding the current uncertain environment, we remain
extremely excited about the future. The electronics revolution
continues to create a significant, long-term growth opportunity for
Amphenol, with new applications and higher performance requirements
driving increased demand for our high technology products across
all of our end markets. Our ongoing actions to strengthen our
competitive advantages and build sustained financial strength, as
well as our initiatives to broaden and diversify our high
technology product offering both organically and through our
successful acquisition program, have created a solid base for
future performance. I am confident in the ability of our
outstanding management team to dynamically adjust to the constantly
changing market 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 19, 2016. 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 Friday, November 18, 2016. The replay numbers are toll
free 888-470-7050; International toll number is 203-369-1484;
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, 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 sales, GAAP
Diluted EPS and Adjusted Diluted EPS, are forward-looking
statements. These statements are based on certain assumptions and
analyses made by the Company in light of its experience and its
perception of historical trends, current conditions and expected
future developments, as well as other factors it believes are
appropriate under the circumstances. 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, 2015, and other Company filings with the
Securities and Exchange Commission including Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K. 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 and Adjusted Diluted
EPS (“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
exclude income and expenses that are not directly related to the
Company’s operating performance during the periods presented. Items
excluded from 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 non-GAAP financial measures
referenced are defined within 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, 2016 2015 2016 2015 Net sales $
1,635.9 $ 1,459.6 $ 4,635.3 $ 4,138.2 Cost of sales
1,098.6 995.6 3,141.3
2,817.1 Gross profit 537.3 464.0 1,494.0 1,321.1
Acquisition-related expenses 6.3 - 36.6 5.7 Selling,
general and administrative expense 204.7 169.2
591.3 499.7 Operating
income 326.3 294.8 866.1 815.7 Interest expense (18.1 )
(17.0 ) (54.2 ) (51.1 ) Other income, net 2.3
4.2 5.0 12.5 Income
before income taxes 310.5 282.0 816.9 777.1 Provision for
income taxes (83.4 ) (74.7 ) (222.6 )
(207.4 ) Net income 227.1 207.3 594.3 569.7 Less: Net income
attributable to noncontrolling interests (2.8 ) (2.8
) (6.8 ) (6.4 ) Net income attributable to
Amphenol Corporation $ 224.3 $ 204.5 $ 587.5 $
563.3 Net income per common share - Basic $
0.73 $ 0.66 $ 1.91 $ 1.82
Weighted average common shares outstanding - Basic 308.9
308.9 308.3 309.3
Net income per common share - Diluted
(1) (2) $ 0.71
$ 0.65 $ 1.86 $ 1.78 Weighted
average common shares outstanding - Diluted 315.7
315.9 315.1 316.9
Dividends declared per common share $ 0.14 $ 0.14 $
0.42 $ 0.39
Note 1 Earnings per share
for the three and nine months ended September 30, 2016 included
acquisition-related expenses of $6.3 million ($5.8 million net of
tax) or $0.02 per share and $36.6 million ($33.1 million net of
tax) or $0.11 per share, respectively. 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 $0.73 and $1.97 for the three and nine
months ended September 30, 2016, respectively.
Note 2
Earnings per share in the nine months ended September 30, 2015
included acquisition-related expenses of $5.7 million ($5.7 million
net of tax) or $0.02 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 $1.80 for the nine months ended September 30,
2015.
AMPHENOL
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (dollars in millions) September
30, December 31, 2016 2015
ASSETS Current Assets:
Cash and cash equivalents $ 853.6 $ 1,737.2 Short-term investments
163.3 23.2 Total cash, cash equivalents
and short-term investments 1,016.9 1,760.4 Accounts receivable,
less allowance for doubtful accounts of $24.6 and $25.6,
respectively 1,319.4 1,104.6 Inventories 926.6 851.8 Other current
assets 142.3 133.2 Total current
assets 3,405.2 3,850.0 Land and depreciable assets, less
accumulated depreciation of $1,003.7 and $900.9, respectively 717.6
609.5 Goodwill 3,707.8 2,692.9 Intangibles and other long-term
assets 539.2 306.0 $ 8,369.8
$ 7,458.4
LIABILITIES & EQUITY
Current Liabilities: Accounts payable $ 650.7 $ 587.8
Accrued salaries, wages and employee benefits 132.1 105.6 Accrued
income taxes 79.5 81.8 Other accrued expenses 233.4 189.7 Accrued
dividends 43.3 43.2 Current portion of long-term debt 374.5
0.3 Total current liabilities 1,513.5
1,008.4 Long-term debt, less current portion 2,598.0 2,813.2
Accrued pension benefit obligations and other long-term liabilities
503.6 358.4 Equity: Common stock 0.3 0.3 Additional paid-in
capital 972.2 783.3 Retained earnings 3,032.8 2,804.4 Accumulated
other comprehensive loss (297.3 ) (349.5 )
Total shareholders' equity attributable to Amphenol Corporation
3,708.0 3,238.5 Noncontrolling interests 46.7
39.9 Total equity 3,754.7
3,278.4 $ 8,369.8 $ 7,458.4
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited) (dollars in millions) Nine months
ended September 30, 2016 2015 Cash from operating
activities: Net income $ 594.3 $ 569.7 Adjustments to reconcile net
income to cash provided by operating activities: Depreciation and
amortization 163.6 128.1 Stock-based compensation expense 35.5 32.1
Excess tax benefits from stock-based compensation payment
arrangements (33.2 ) (9.4 ) Net change in components of working
capital (27.4 ) (7.0 ) Net change in other long-term assets and
liabilities (4.1 ) (5.3 ) Net cash provided by
operating activities 728.7 708.2
Cash from investing activities: Purchases of land and depreciable
assets (136.3 ) (130.8 ) Proceeds from disposals of land and
depreciable assets 4.0 6.7 Purchases of short-term investments
(173.3 ) (121.9 ) Sales and maturities of short-term investments
33.3 459.5 Acquisitions, net of cash acquired (1,272.6 )
(199.8 ) Net cash (used in) provided by investing
activities (1,544.9 ) 13.7 Cash from
financing activities: Long-term borrowings under credit facilities
- 125.0 Repayments of long-term debt - (211.8 ) Borrowings under
commercial paper program, net 145.8 266.9 Payment of costs related
to debt financing (3.0 ) - Proceeds from exercise of stock options
120.8 45.8 Excess tax benefits from stock-based compensation
payment arrangements 33.2 9.4 Distributions to shareholders of
noncontrolling interests (5.8 ) (6.1 ) Purchase and retirement of
treasury stock (229.6 ) (195.6 ) Dividend payments (129.4 )
(116.1 ) Net cash used in financing activities
(68.0 ) (82.5 ) Effect of exchange rate changes on
cash and cash equivalents 0.6 (32.7 )
Net change in cash and cash
equivalents (883.6 ) 606.7 Cash and cash equivalents balance,
beginning of period 1,737.2 968.9
Cash and cash equivalents balance, end of period $ 853.6
$ 1,575.6 Cash paid for: Interest $ 65.2 $
62.1 Income taxes 192.4 182.9
AMPHENOL CORPORATION
SEGMENT INFORMATION (Unaudited) (dollars in
millions) Three months ended Nine months ended September
30, September 30, 2016 2015 2016 2015
Net
sales:
Interconnect Products and Assemblies $ 1,543.2 $ 1,378.2 $ 4,366.9
$ 3,889.5 Cable Products and Solutions 92.7
81.4 268.4 248.7 Consolidated
Net sales $ 1,635.9 $ 1,459.6 $ 4,635.3 $
4,138.2
Operating
income:
Interconnect Products and Assemblies $ 342.0 $ 307.4 $ 932.2 $
856.3 Cable Products and Solutions 13.8 10.2 38.6 30.2 Stock-based
compensation expense (12.2 ) (11.8 ) (35.5 ) (32.1 ) Other
operating expenses (11.0 ) (11.0 ) (32.6 ) (33.0 )
Acquisition-related expenses (6.3 ) -
(36.6 ) (5.7 ) Consolidated Operating income $ 326.3
$ 294.8 $ 866.1 $ 815.7
Operating margin
(%):
Interconnect Products and Assemblies 22.2 % 22.3 % 21.3 % 22.0 %
Cable Products and Solutions 14.9 % 12.5 % 14.4 % 12.1 %
Stock-based compensation expense -0.7 % -0.8 % -0.8 % -0.8 % Other
operating expenses -0.7 % -0.8 % -0.7 % -0.8 % Acquisition-related
expenses -0.4 % 0.0 % -0.8 % -0.1 % Consolidated Operating margin
(%) 19.9 % 20.2 % 18.7 % 19.7 %
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 indicated 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
exclude income and expenses that are not directly related to the
Company's operating performance during the periods presented. Items
excluded from 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 GAAP financial measures. The following are
reconciliations of non-GAAP financial measures to the most directly
comparable GAAP financial measures, specifically Operating Income,
Operating Margin, Net Income attributable to Amphenol Corporation,
and Diluted earnings per share (EPS) for the three and nine months
ended September 30, 2016 and 2015:
Three months
ended September 30, 2016 September 30,
2015 Net Income
Net Income Operating Operating
attributable Diluted Operating
Operating attributable Diluted Income
Margin to Amphenol EPS
Income Margin to Amphenol
EPS Reported (GAAP) $ 326.3 19.9 % $ 224.3 $ 0.71 $
294.8 20.2 % $ 204.5 $ 0.65 Acquisition-related expenses
6.3 0.4 % 5.8 0.02
- - - - Adjusted
(non-GAAP)
(1) $ 332.6 20.3 % $ 230.1 $
0.73 $ 294.8 20.2 % $ 204.5 $ 0.65
Nine months ended September 30, 2016
September 30, 2015 Net Income Net Income
Operating Operating attributable
Diluted Operating Operating
attributable Diluted Income
Margin to Amphenol EPS
Income Margin to Amphenol
EPS Reported (GAAP) $ 866.1 18.7 % $ 587.5 $ 1.86 $
815.7 19.7 % $ 563.3 $ 1.78 Acquisition-related expenses
36.6 0.8 % 33.1 0.11
5.7 0.1 % 5.7 0.02
Adjusted (non-GAAP)
(1) $ 902.7 19.5 % $ 620.6
$ 1.97 $ 821.4 19.8 % $ 569.0 $ 1.80
(1) Adjusted Operating Income, Adjusted Operating
Margin, Adjusted Net Income attributable to Amphenol, 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 is defined as Net Income attributable
to Amphenol Corporation, as reported in the Condensed Consolidated
Statements of Income, excluding income and expenses and its 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 GAAP),
excluding income and expenses and its related tax effects, that are
not directly related to the Company's operating performance during
the periods presented.
AMPHENOL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION RECONCILIATION OF GAAP
TO NON-GAAP FINANCIAL MEASURES - GUIDANCE (Unaudited)
Management utilizes the non-GAAP financial measures
indicated 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 exclude income and expenses that are
not directly related to the Company's operating performance during
the periods presented. Items excluded from 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 GAAP
financial measures. 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 2016 and
the full year 2016:
GUIDANCE (1) FOURTH QUARTER
2016
FULL YEAR
2016
Diluted EPS (GAAP) $0.71 - $0.73 $2.57
- $2.59 Acquisition-related expenses, net of tax - $0.11
Adjusted Diluted EPS
(non-GAAP) $0.71 - $0.73 $2.68 - $2.70
(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 2016 guidance only reflects the impact of the
acquisition-related expenses, net of tax, that were incurred during
the nine months ended September 30, 2016.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161019005292/en/
Amphenol CorporationCraig A. Lampo, 203-265-8625Senior Vice
President and Chief Financial Officerwww.amphenol.com
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