Amphenol Corporation Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q2 2020 sales were $1.987B, down 1% year-over-year (YOY) in USD, flat in local currency. Sales were up 7% sequentially.
  • Organic sales declined 3% YOY.
  • Adjusted diluted EPS was $0.81, down 12% YOY (from $0.92). GAAP EPS was $0.85, down 9% YOY.
  • Orders were $1.971B (book-to-bill just under 1.0), down 2% YOY.
  • Strong cash generation: operating cash flow of $368M (150% of adjusted net income) and free cash flow of $301M.
  • Amphenol ended Q2 with $1.3B in cash and $3.8B total debt; no revolver or commercial paper borrowing outstanding.

Margins

  • Operating margin: 18%, down 230 bps YOY due to COVID‑related productivity restrictions; sequential improvement of 100 bps.
  • Interconnect segment margin: 20% (vs. 22.2% YOY; up from 19.1% in Q1).
  • Cable segment margin: 9.4% (vs. 9.7% YOY; up from 7.6% in Q1).
  • Management noted COVID‑related costs and lower-margin recent acquisitions continue to pressure margins.

Market Segment Performance (Compared to Q2 2019 unless noted)

  • Military (10% of sales): down 12% YOY; down 20% sequentially due to global production restrictions. Expected to rebound to Q1 levels in Q3.

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Operator: Hello, and welcome to the Second Quarter Earnings Conference Call for Amphenol Corporation. Following today’s presentation, there will be a formal question-and-answer session. Until then, all lines will remain in a listen-only mode. At the request of the company, today’s conference is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to introduce today’s conference host, Mr. Craig Lampo. Sir, you may begin. Craig Lampo: Thank you very much. Good afternoon, everyone. This is Craig Lampo, Amphenol's CFO, and I'm here together with Adam Norwitt, our CEO. We would like to welcome you to our second quarter 2020 conference call. As a reminder, during the call, we may refer to certain non-GAAP financial measures and may make certain forward-looking statements. So please refer to the relevant disclosures in our press release for further information. The company closed the second quarter with sales of $1.987 billion and with GAAP and adjusted diluted EPS of $0.85 and $0.81, respectively. Sales were down 1% in U.S. dollars and were flat in local currencies, compared to the second quarter of 2019. From an organic standpoint, excluding both acquisitions and currency impacts, sales in the second quarter decreased 3%. Sequentially, sales were up 7% in U.S. dollars in local currencies inorganically. Breaking down sales into our two segments. The interconnect business, which comprised 96% of our sales, was down 1% in U.S. dollars and wa

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