Amphenol Corporation Q3 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Record quarterly sales of $2.323 billion, up 11% year-over-year (10% in local currency). Sequential growth was a strong 17%.
  • Record GAAP diluted EPS of $1.12 (up 22% YoY) and adjusted EPS of $1.09 (up 15% YoY).
  • Organic sales increased 9% from Q3 2019.
  • Orders were $2.275 billion, up 9% YoY, resulting in a 0.98 book-to-bill ratio.
  • Operating margin improved to 20.5%, up 250 bps sequentially and 80 bps YoY due to higher sales leverage and reduced COVID-related costs.
  • Free cash flow was $330 million (98% of adjusted net income).
  • Board approved a 16% dividend increase from $0.25 to $0.29 per share starting January 2021.

Segment Performance

  • Interconnect segment (96% of sales): +11% YoY, margin of 22.4% (up from 21.7% last year).
  • Cable segment (4% of sales): +2% YoY, margin of 10.7% (up from 10.2% last year).

End Market Highlights

Military (12% of sales)
  • Sales +6% YoY; +30% sequentially as facilities recovered from Q2 COVID restrictions.
  • Full-year expectation: low single-digit growth due to earlier shutdown impacts.
Commercial Aerospace (2% of sales)
  • Sales -40% YoY; +4% sequentially.
  • Q4 expected to decline ~20% sequentially; full year down ~35% due to global travel collapse.

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Operator: Hello and welcome to the Third 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. [Operator Instructions] I would now like to introduce today's conference host, Mr. Craig Lampo. Sir, you may begin. Craig Lampo: Thank you. 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 third 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 third quarter with record sales of $2,323 million, and record GAAP and adjusted diluted EPS of $1.12 and $1.09 respectively. Sales were up 11% in U.S. dollars and up 10% in local currencies compared to the third quarter of 2019. Sales in the third quarter increased by 9% organically, and sequentially, sales were up 17% in U.S. dollars and 15% in local currencies inorganically. Breaking down sales into our two segments, the interconnect business which comprised 96% of our sales was up 11% in U.S. dollars and 10% in local currencies compared to the third quarter of last year. Our cable business which comprised 4%

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