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Amphenol(APH) - 2023 Q1 - Quarterly Report
APHAmphenol(APH)2023-04-27 16:00
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Net Sales and Segment Performance - Net sales in Q1 2023 were 2,974.0million,a12,974.0 million, a 1% increase in U.S. dollars, 3% in constant currencies, and 1% organically compared to Q1 2022[112] - Harsh Environment Solutions segment sales increased 17% in U.S. dollars, 20% in constant currencies, and 15% organically in Q1 2023, driven by growth in commercial aerospace, automotive, military, and industrial markets[113] - Communications Solutions segment sales decreased 15% in U.S. dollars, 13% in constant currencies, and 13% organically in Q1 2023, primarily due to declines in IT, data communications, industrial, mobile networks, and mobile devices markets[114] - Interconnect and Sensor Systems segment sales increased 10% in U.S. dollars, 13% in constant currencies, and 10% organically in Q1 2023, driven by growth in industrial and automotive markets[114] - The Harsh Environment Solutions segment accounted for approximately 29% of total net sales in Q1 2023[113] - The Communications Solutions segment accounted for approximately 38% of total net sales in Q1 2023[114] - The Interconnect and Sensor Systems segment accounted for approximately 33% of total net sales in Q1 2023[114] - Organic growth in Q1 2023 was driven by commercial aerospace, broadband communications, military, automotive, and industrial markets[112] - Organic sales declines in Q1 2023 were seen in IT, data communications, mobile networks, and mobile devices markets[112] - Net sales for the first quarter of 2023 were 2,974.0 million, a 1% increase compared to 2,951.9millioninthesameperiodof2022[117]−HarshEnvironmentSolutionssegmentnetsalesgrewby172,951.9 million in the same period of 2022[117] - Harsh Environment Solutions segment net sales grew by 17% to 854.2 million, driven by a 20% constant currency growth and 5% acquisition impact[117] - Communications Solutions segment net sales declined by 15% to 1,126.7million,witha131,126.7 million, with a 13% constant currency decline[117] - Interconnect and Sensor Systems segment net sales increased by 10% to 993.1 million, with a 13% constant currency growth and 3% acquisition impact[117] Financial Performance and Income - Operating income for the first quarter of 2023 was 591.7million,or19.9591.7 million, or 19.9% of net sales, compared to 589.8 million, or 20.0% of net sales, in the same period of 2022[119] - Adjusted Operating Income for the first quarter of 2023 was 597.1million,or20.1597.1 million, or 20.1% of net sales, compared to 589.8 million, or 20.0% of net sales, in the same period of 2022[119] - Net income attributable to Amphenol Corporation for the first quarter of 2023 was 439.2million,or439.2 million, or 0.71 per diluted share, compared to 425.7million,or425.7 million, or 0.68 per diluted share, in the same period of 2022[125] - Adjusted Net Income attributable to Amphenol Corporation for the first quarter of 2023 was 426.1million,or426.1 million, or 0.69 per diluted share, compared to 421.9million,or421.9 million, or 0.67 per diluted share, in the same period of 2022[125] Cash Flow and Liquidity - The Company had cash, cash equivalents, and short-term investments of 1,498.7millionasofMarch31,2023,comparedto1,498.7 million as of March 31, 2023, compared to 1,434.2 million as of December 31, 2022[129] - Net cash provided by operating activities increased to 532.4millioninQ12023,upfrom532.4 million in Q1 2023, up from 350.8 million in Q1 2022, primarily due to lower working capital usage[136] - Free Cash Flow (non-GAAP) rose to 435.5millioninQ12023,comparedto435.5 million in Q1 2023, compared to 274.5 million in Q1 2022, driven by higher Operating Cash Flow[140] - Net cash used in investing activities was 256.6millioninQ12023,primarilydueto256.6 million in Q1 2023, primarily due to 113.2 million for acquisitions and 96.9millionincapitalexpenditures[141]−Netcashusedinfinancingactivitieswas96.9 million in capital expenditures[141] - Net cash used in financing activities was 265.4 million in Q1 2023, driven by 387.5millioninnetrepaymentsofcommercialpaperand387.5 million in net repayments of commercial paper and 166.9 million in stock repurchases[144] - The company's free cash flow is defined as net cash provided by operating activities less capital expenditures, net of proceeds from disposals of property, plant, and equipment[170] Debt and Financing - The company has a 2,500.0millionRevolvingCreditFacility,withnooutstandingborrowingsasofMarch31,2023[146]−Thecompanyissued2,500.0 million Revolving Credit Facility, with no outstanding borrowings as of March 31, 2023[146] - The company issued 245.1 million in USCP Notes in Q1 2023, with a weighted average interest rate of 5.29%, down from 632.8millioninQ42022[148]−Thecompany′s2022TermLoanremainsundrawnasofMarch31,2023,witha632.8 million in Q4 2022[148] - The company's 2022 Term Loan remains undrawn as of March 31, 2023, with a 750.0 million capacity and a maturity date of April 19, 2024[147] - The company issued 350.0millionof4.750350.0 million of 4.750% Senior Notes due March 30, 2026, primarily to repay outstanding borrowings under the U.S. Commercial Paper Program[152] - The company's Euro Notes consist of two series with a principal amount of €500.0 million each, maturing in May 2026 and October 2028[154] - The company's Senior Notes impose certain obligations and prohibit various actions unless specific financial requirements are met, and the company was in compliance as of March 31, 2023[155] - Outstanding borrowings under the U.S. Commercial Paper Program as of March 31, 2023, were at a weighted average floating interest rate of 5.29%[173] - No outstanding borrowings under the Revolving Credit Facility, 2022 Term Loan, and Euro Commercial Paper Program as of March 31, 2023[173] - The company may borrow under the Revolving Credit Facility, Commercial Paper Programs, and a 750.0 million unsecured delayed draw term loan credit agreement[173] - Borrowings under the Euro Commercial Paper Program and Revolving Credit Facility may be denominated in foreign currencies, exposing the company to exchange rate risks[173] - Interest rates for borrowings under the Revolving Credit Facility fluctuate based on the company's debt rating and currency-specific benchmark rates[173] - The 2022 Term Loan, entered into in April 2022, bears interest at rates fluctuating with a spread based on the company's debt rating over the base rate or adjusted term SOFR[173] - Commercial Paper Programs are subject to floating interest rates, exposing the company to market risk related to interest rate changes[173] - Recent increases in the federal funds rate by the U.S. Federal Reserve have substantially increased floating interest rates related to the U.S. Commercial Paper Program[173] - The company does not expect changes in interest rates to have a material effect on income or cash flows for the remainder of 2023, primarily due to limited reliance on floating rate borrowings[173] Acquisitions and Investments - The company completed one acquisition in Q1 2023 for approximately 113.2million,netofcashacquired,intheHarshEnvironmentSolutionssegment[158]−Thecompanyincurred113.2 million, net of cash acquired, in the Harsh Environment Solutions segment[158] - The company incurred 5.4 million (4.0millionafter−tax)ofacquisition−relatedexpensesinQ12023,primarilyduetoamortizationrelatedtoacquiredbacklog[161]ShareRepurchasesandDividends−Thecompanyrepurchased2.1millionsharesofitsCommonStockfor4.0 million after-tax) of acquisition-related expenses in Q1 2023, primarily due to amortization related to acquired backlog[161] Share Repurchases and Dividends - The company repurchased 2.1 million shares of its Common Stock for 166.9 million in Q1 2023 under the 2021 Stock Repurchase Program[156] - The company declared a quarterly dividend of 0.21pershareinQ12023,anincreasefrom0.21 per share in Q1 2023, an increase from 0.20 per share in Q1 2022[157] - The company has remaining authorization to purchase up to 605.2millionofitsCommonStockunderthe2021StockRepurchaseProgramasofApril26,2023[156]TaxandRegulatoryImpact−TheInflationReductionActof2022didnothaveamaterialimpactonthecompany′sfinancialconditioninQ12023[111]−Thecompanyplanstorepatriatemostofitspre−2023foreignearnings,withassociatedtaxpaymentsdueasrepatriationsaremade[133]WorkingCapitalandInventory−Accountsreceivabledecreasedby605.2 million of its Common Stock under the 2021 Stock Repurchase Program as of April 26, 2023[156] Tax and Regulatory Impact - The Inflation Reduction Act of 2022 did not have a material impact on the company's financial condition in Q1 2023[111] - The company plans to repatriate most of its pre-2023 foreign earnings, with associated tax payments due as repatriations are made[133] Working Capital and Inventory - Accounts receivable decreased by 219.4 million to 2,411.9millioninQ12023,drivenbylowersalesandpartiallyoffsetbyacquisitionsandexchangerateeffects[138]−Inventoriesincreasedby2,411.9 million in Q1 2023, driven by lower sales and partially offset by acquisitions and exchange rate effects[138] - Inventories increased by 11.5 million to $2,105.1 million in Q1 2023, influenced by acquisitions and exchange rate changes, with inventory days rising from 86 to 93 days[138] Market Risks - The company is exposed to market risks related to foreign currency exchange rates and interest rate changes, with no significant concentration with any one counterparty[173]