Amphenol Corporation Q3 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q3 2023 sales were $3.199 billion, down 3% year-over-year and down 5% organically versus Q3 2022, but up 5% sequentially.
  • Adjusted diluted EPS was $0.78, down 3% from $0.80 in Q3 2022, but up 8% sequentially.
  • GAAP diluted EPS was $0.83, up 4% from $0.80 in Q3 2022.
  • Book-to-bill ratio was 0.99; quarterly orders of $3.164 billion were flat year-over-year and up 4% sequentially.
  • Adjusted operating margin was 20.8%, down 20 basis points year-over-year, but up 40 basis points sequentially.
  • Free cash flow was $544 million, 112% of adjusted net income.
  • Dividend increased 5% to $0.22 per share beginning January 2024.
  • 1.7 million shares repurchased for $275 million in capital returns.
  • Net leverage ratio: 0.8x.

Segment Performance (Compared with Q3 2022)

  • Harsh Environment Solutions: $887 million, +12% reported, +7% organic; margin 26.9%.
  • Communication Solutions: $1.279 billion, -16% reported and organic; margin 22.1%.
  • Interconnect and Sensor Systems: $1.033 billion, +5% reported, +1% organic; margin 18.3%.

Market Commentary

  • Military (11% of sales): +26% reported, +22% organic; strong across all segments. Expected to remain stable in Q4.
  • Commercial Aerospace (4%): +40% reported, +37% organic; strong demand, slight expected seasonal Q4 decline.

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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. If anyone has any objection, 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 am here together with Adam Norwitt, our CEO. We would like to welcome you to our third quarter 2023 conference call. Our third quarter 2023 results were released this morning. I will provide some financial commentary and then Adam will give an overview of the business and current trends, and then we will take questions. As a reminder, during the call, we may refer to certain non-GAAP financial measures and 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 sales of $3.199 billion in GAAP and adjusted diluted EPS of $0.83 and $0.78, respectively. Third quarter sales were down 3% in U.S. dollars and low-income currencies and 5% organically compared to the third quarter of 2022. Sequentially sales were up 5% in U.S. dollars, local currencies, and organically. Adam will comment further on trends by mark

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