Amphenol(APH) - 2024 Q3 - Quarterly Report

Net Sales Growth - Net sales in Q3 2024 increased by 26% to $4,038.8 million compared to$3,199.2 million in Q3 2023, driven by strong organic growth in the Communications Solutions segment and moderate growth in the Interconnect and Sensor Systems and Harsh Environment Solutions segments[114] - Net sales for the first nine months of 2024 increased by 18% to $10,904.9 million compared to$9,227.2 million in the same period of 2023, with strong organic growth in the IT datacom, defense, and commercial aerospace markets[115] - Harsh Environment Solutions segment net sales in Q3 2024 increased by 35% in U.S. dollars and 3% organically, driven by contributions from acquisitions and strong growth in IT datacom, commercial aerospace, and mobile networks markets[116] - Communications Solutions segment experienced strong organic growth in Q3 2024, contributing significantly to the overall net sales increase[114] - Organic net sales growth in Q3 2024 was 15%, excluding currency and acquisition impacts[114] - Organic net sales growth for the first nine months of 2024 was 11%, excluding currency and acquisition impacts[115] - The IT datacom, mobile devices, and commercial aerospace markets showed strong organic growth in Q3 2024[114] - The defense market experienced moderate growth in Q3 2024, contributing to the overall increase in net sales[114] - Communications Solutions segment net sales increased 32% in Q3 2024 compared to Q3 2023, driven by strong organic growth in IT datacom, mobile devices, automotive, industrial, and mobile networks markets[117] - Interconnect and Sensor Systems segment net sales increased 12% in Q3 2024 compared to Q3 2023, primarily driven by contributions from acquisitions and strong organic growth in the IT datacom market[118] - Consolidated net sales for Q3 2024 were $4,038.8 million, a 26$2,627.1 million, a 27% increase compared to Q3 2023, with organic net sales growth of 22%[120] Segment Performance - The Harsh Environment Solutions segment accounted for approximately 29% of total net sales in Q3 2024[116] - Communications Solutions segment operating income for Q3 2024 was $431.0 million, or 25.6$283.3 million, or 22.1% of net sales, for Q3 2023[126] - Harsh Environment Solutions segment operating income for Q3 2024 was $283.7 million, or 23.8$239.1 million, or 26.9% of net sales, for Q3 2023[125] - Operating income for the Interconnect and Sensor Systems segment in Q3 2024 was $217.6 million, or 18.8$188.9 million, or 18.3% of net sales, in Q3 2023[127] Financial Performance - Selling, general and administrative expenses were $492.0 million, or 12.2$381.6 million, or 11.9% of net sales, for Q3 2023[123] - Operating income for Q3 2024 was $819.5 million, or 20.3$657.9 million, or 20.6% of net sales, for Q3 2023[124] - Adjusted Operating Income for Q3 2024 was $883.1 million, or 21.9$666.9 million, or 20.8% of net sales, for Q3 2023[124] - Interest expense for Q3 2024 was $55.7 million, up from$33.6 million in Q3 2023, driven by higher borrowing levels and interest rates[128] - Effective tax rate for Q3 2024 was 21.4%, compared to 18.2% in Q3 2023, impacted by stock option exercises and acquisition-related expenses[129] - Net income attributable to Amphenol Corporation for Q3 2024 was $604.4 million, with Diluted EPS of$0.48, up from $513.9 million and$0.41 in Q3 2023[130] - Adjusted Operating Income for Q3 2024 was $883.1 million, with an Adjusted Operating Margin of 21.9$666.9 million and 20.8% in Q3 2023[131] - Adjusted Net Income attributable to Amphenol Corporation for the first nine months of 2024 was $1,686.9 million, with Adjusted Diluted EPS of$1.34, up from $1,357.1 million and$1.09 in the same period of 2023[132] Cash Flow and Working Capital - As of September 30, 2024, the company had cash, cash equivalents, and short-term investments of $1,583.3 million, down from$1,660.2 million at the end of 2023[133] - Net cash provided by operating activities for the first nine months of 2024 was $1,967.6 million, up from$1,686.9 million in the same period of 2023[138] - Working capital components increased by $197.6 million in the first nine months of 2024, driven by higher accounts receivable, inventories, and prepaid expenses[139] - Accounts receivable increased by$511.9 million to $3,130.3 million, driven by higher sales in Q3 2024 and the impact of 2024 Acquisitions[140] - Inventories increased by$411.7 million to $2,578.8 million, primarily due to the 2024 Acquisitions and higher sales in Q3 2024[140] - Free Cash Flow increased to$1,509.1 million for the nine months ended September 30, 2024, up from $1,421.2 million in the same period in 2023[141] - Net cash used in investing activities was$2,398.2 million in the first nine months of 2024, driven by $2,099.8 million for acquisitions and$458.5 million in capital expenditures[143] - Net cash provided by financing activities was $515.8 million in the first nine months of 2024, primarily due to$1,500.1 million in net cash proceeds from borrowings[145] - Days sales outstanding decreased to 69 days at September 30, 2024, compared to 70 days at December 31, 2023[140] - Inventory days increased to 87 days at September 30, 2024, compared to 85 days at December 31, 2023[140] Acquisitions and Investments - The company's acquisition program played a key role in driving net sales growth across all segments in both Q3 and the first nine months of 2024[114][115][116] - The company completed two acquisitions in 2024, including CIT, for approximately $2,099.8 million, net of cash acquired[161] - The CIT acquisition was completed for approximately$1,995.3 million, net of cash acquired, and was funded through a combination of net proceeds from the New Senior Notes, borrowings under the U.S. Commercial Paper Program, and cash on hand[162] - The company entered into a Purchase Agreement to acquire CommScope's Mobile Networks Business for approximately $2,100 million, expected to close in Q1 2025[166] - The company incurred$63.6 million in acquisition-related expenses in Q3 2024 and $133.6 million in the first nine months of 2024, primarily due to the CIT acquisition[164] - The company completed 10 acquisitions in 2023 for approximately$970.4 million, net of cash acquired, with one acquisition resulting in a non-cash gain of $5.4 million[163] Debt and Financing - The Company increased its Revolving Credit Facility by$500.0 million to $3,000.0 million, maturing in March 2029[147] - The Company issued$1,500.0 million in New Senior Notes in April 2024, including $450.0 million due in 2027,$450.0 million due in 2029, and $600.0 million due in 2034[153] - The Company repaid$350.0 million in 3.20% Senior Notes upon maturity in April 2024[154] - The company's Euro Notes have an aggregate principal amount of €500.0 million each, with one series maturing in May 2026 and the other in October 2028[155] - The company manages interest rate risk through a mix of fixed and variable rate debt, with recent fixed-rate senior notes issued in April 2024[176] - As of September 30, 2024, the company had no borrowings outstanding under the Revolving Credit Facility, U.S. Commercial Paper Program, and Euro Commercial Paper Program[176] - The company borrowed under the U.S. Commercial Paper Program in the first nine months of 2024, partially funding the acquisition of Carlisle Interconnect Technologies (CIT) in May 2024[176] - The U.S. Federal Reserve lowered the federal funds rate modestly in September 2024, potentially reducing future interest expenses if the company borrows under floating rate instruments[176] - The company is exposed to foreign currency exchange rate risk, particularly with borrowings under the Euro Commercial Paper Program and Revolving Credit Facility denominated in various foreign currencies[175] - The company does not expect changes in interest rates to have a material effect on income or cash flows for the remainder of 2024[176] Share Repurchases and Dividends - The company repurchased 2.7 million shares for $176.2 million in Q3 2024 and 4.5 million shares for$294.8 million in the first nine months of 2024 under the 2024 Stock Repurchase Program[157] - The company has remaining authorization to repurchase up to $1,669.4 million of its Common Stock under the 2024 Stock Repurchase Program as of October 23, 2024[157] - The company repurchased 4.1 million shares for$225.6 million under the 2021 Stock Repurchase Program in the first nine months of 2024, which were the final repurchases under this program[158] - The company declared quarterly dividends of $0.165 per share in Q3 2024, an increase from$0.105 per share in Q3 2023[159][160] Internal Controls and Risk Management - The company's disclosure controls and procedures were effective as of the end of the reporting period, ensuring timely and accurate financial reporting[177] - There has been no material change in the company's internal control over financial reporting during the most recent fiscal quarter[178] Currency and Interest Rate Impact - The weaker U.S. dollar in Q3 2024 increased sales by approximately $9.2 million compared to Q3 2023[122]