Amphenol(APH) - 2025 Q4 - Annual Report

Financial Performance - Net sales for Amphenol in 2025 reached $23,094.7 million, a 52% increase from $15,222.7 million in 2024, with organic growth of 38%[148] - Net sales for 2024 were $15,222.7 million, a 21% increase from $12,554.7 million in 2023, with 13% organic growth[172] - Operating income as a percentage of net sales improved to 25.4% in 2025 from 20.7% in 2024[157] - Net income attributable to Amphenol Corporation was 18.5% of net sales in 2025, up from 15.9% in 2024[157] - Operating income increased to $5,868.6 million, or 25.4% of net sales in 2025, compared to $3,156.9 million, or 20.7% of net sales in 2024[158] - Adjusted Operating Income for 2025 was $6,049.8 million, with an Adjusted Operating Margin of 26.2%, compared to $3,302.5 million and 21.7% in 2024[160] - Net income attributable to Amphenol Corporation for 2025 was $4,270.3 million, or $3.34 per diluted share, up from $2,424.0 million, or $1.92 per diluted share in 2024[169] Segment Performance - The Communications Solutions segment accounted for approximately 52% of net sales, increasing by 91% in U.S. dollars and 71% organically in 2025 compared to 2024[149] - The Harsh Environment Solutions segment, representing about 26% of net sales, saw a 33% increase in U.S. dollars and 17% organically in 2025 compared to 2024[150] - The Interconnect and Sensor Systems segment, making up approximately 22% of net sales, experienced a 15% increase in U.S. dollars and 13% organically in 2025 compared to 2024[151] - The Communications Solutions segment accounted for approximately 42% of net sales in 2024, increasing by 29% in both U.S. dollars and constant currencies[175] - The Harsh Environment Solutions segment, representing approximately 29% of net sales, increased by 25% in 2024, primarily driven by acquisitions[176] Expenses and Income - Operating expenses for 2025 were $17,122.7 million, or 74.1% of net sales, down from $11,938.4 million, or 78.4% of net sales in 2024[158] - Interest expense rose to $367.8 million in 2025 from $217.0 million in 2024, mainly due to higher borrowing levels for acquisitions[164] - The effective tax rate for 2025 was 23.1%, compared to 18.9% in 2024, influenced by various tax benefits and discrete tax items[166] - Acquisition-related expenses in 2025 totaled $181.2 million, impacting net income by $148.8 million, or $0.12 per share[160] Cash Flow and Investments - Net cash provided by operating activities increased to $5,374.7 million in 2025, compared to $2,814.7 million in 2024[207] - Free Cash Flow rose to $4,392.9 million in 2025, up from $2,157.1 million in 2024, while it was $2,159.9 million in 2023[214] - Net cash used in investing activities was $5,082.1 million in 2025, primarily driven by $3,818.6 million for acquisitions and $981.8 million for capital expenditures[216] - Net cash provided by financing activities was $7,423.2 million in 2025, significantly up from $1,729.9 million in 2024, and compared to a net cash used of $1,012.4 million in 2023[218] Acquisitions and Growth Strategy - The company is focused on expanding its global presence and pursuing strategic acquisitions to enhance market position[145] - The Company completed five acquisitions in 2025 for approximately $3,818.6 million, funded through cash on hand and proceeds from senior notes[247] - The Company completed the acquisition of CommScope for approximately $10,500.0 million in cash on January 9, 2026[252] Debt and Financing - The Company entered into a $2,000.0 million unsecured delayed draw term loan credit agreement on August 22, 2025, scheduled to mature in three years[222] - The Company issued $750.0 million of unsecured 4.375% Senior Notes due June 12, 2028, on June 12, 2025[230] - The Company issued $1,600.0 million of unsecured 4.625% Senior Notes due February 15, 2036, and $1,650.0 million of unsecured 5.300% Senior Notes due November 15, 2055[232] - The Company borrowed $1,534.1 million under Delayed Draw Term Loans in January 2026 to fund part of the CommScope acquisition[195] Shareholder Returns - The quarterly dividend rate was increased from $0.165 per share to $0.25 per share, effective with dividends declared in the fourth quarter of 2025[243] - Total dividends declared in 2025 amounted to $909.3 million, compared to $662.9 million in 2024[245] - The Company repurchased 7.4 million shares of its Common Stock for $665.2 million under the 2024 Stock Repurchase Program during 2025[241] Risks and Challenges - The Company faces challenges in obtaining raw materials and components due to supply chain constraints and inflationary pressures, which may lead to increased costs and supply shortages[255] - The Company is exposed to foreign currency exchange rate risks, which can affect sales, operating margins, and equity, and it employs various strategies to mitigate this risk[256][272] Accounting and Financial Measures - The Company defines Free Cash Flow as net cash provided by operating activities less capital expenditures, which is crucial for assessing liquidity and cash generation capabilities[264] - Adjusted Diluted EPS is calculated by excluding income and expenses not directly related to operating performance, providing a clearer view of the Company's financial health[259] - Organic Net Sales Growth excludes the impact of foreign currency exchange rates and acquisitions, reflecting the underlying sales trends more accurately[264] - The Company utilizes non-GAAP financial measures to provide additional insights into its financial performance, which may differ from similar measures used by other companies[258]